Which of the following is not true for banks in developing countries?
A) Banks are often viewed with suspicion.
B) Many bank depositors withdraw their funds at the first sign of economic problems.
C) Banks often make loans for extended periods because they can easily rely on a continuous supply of deposits.
D) If financial institutions fail to serve as intermediaries between savers and borrowers, the lack of funds for investment becomes an obstacle to growth.
E) The credit provided by banks as a percentage of total output is one-fifth of that in high-income countries.

Question

Quizplus · Accepted Answer

Banks in developing countries often struggle to maintain a continuous supply of deposits, which means they cannot rely on them for extended periods. This is because many bank depositors withdraw their funds at the first sign of economic problems, as stated in option B. Option A is also true, as banks in developing countries may be viewed with suspicion due to a lack of transparency and stability. Option D is also accurate, as financial institutions' failure to serve as intermediaries can hinder investment and economic growth. Option E is also true, as the credit provided by banks in developing countries is often much lower than that in high-income countries. Therefore, option C is the only statement that is not true.

Which of the Following Is Not True for Banks in Developing