The recent financial crisis highlighted, in retrospect, how heavily households and businesses had come to rely on FIs to act as specialists in

Question

Quizplus · Accepted Answer

The financial crisis showed how important it is for households and businesses to have FIs that specialize in risk measurement and management. This was a major contributing factor to the crisis, as many FIs failed to properly assess and manage risk. While FIs may also provide other services like investment advice and brokerage, time intermediation, and derivative securities, the crisis highlighted that their role in risk management is crucial.

The Recent Financial Crisis Highlighted, in Retrospect, How Heavily Households