If not done by FIs, the process of monitoring the actions of borrowers would reduce the attractiveness and increase the risk of investing in corporate debt and equity by individuals.

Question

Quizplus · Accepted Answer

If financial institutions do not monitor the actions of borrowers, it would increase the risk and reduce the attractiveness of investing in corporate debt and equity by individuals. This is because individuals would have to rely solely on publicly available information, which can be limited and potentially misleading. Financial institutions, on the other hand, have the resources and expertise to conduct thorough analysis and monitor borrower behavior, reducing risk for investors.

If Not Done by FIs, the Process of Monitoring the Actions