Which of the following implies that small FI's are more cost efficient than large FI's, and that in a freely competitive environment for financial services, small FI's may outperform their larger counterparts?
A)economies of scale
B)diseconomies of scale
C)economies of scope
D)diseconomies of scope

Question

Quizplus · Accepted Answer

Diseconomies of scale imply that as the size of the FI increases, the costs per unit also increase, which means that large FIs are less cost-efficient than small FIs. This suggests that small FIs may outperform their larger counterparts in a freely competitive environment for financial services.

Which of the Following Implies That Small FI's Are More