Small savers would rather use financial institutions than lend directly to borrowers because:

Question

Quizplus · Accepted Answer

By using financial institutions, small savers can diversify the risk associated with lending to just one borrower. Financial institutions spread the risk across many borrowers, reducing the chances of losing all of the money if one borrower defaults. This may not be possible if a saver were to lend directly to a borrower. Options A, B, and D do not accurately explain why small savers would choose to use financial institutions over lending directly to borrowers.

Small Savers Would Rather Use Financial Institutions Than Lend Directly