How do banks and financial intermediation support economic growth and development?

Question

Quizplus · Accepted Answer

Banks and financial intermediaries provide funds for investment in capital accumulation and technology advancements, which can lead to increased productivity and ultimately economic growth and development. This can benefit not only the businesses themselves but also the wider economy.

Option B is incorrect as the purchase of goods and services by customers is not directly related to economic growth and development.

Option C is incorrect as financing government expenditures is not a primary role of banks and financial intermediation, and may not necessarily lead to economic growth and development.

Option D is incorrect as granting loans to foreign-born individuals to invest in countries outside the U.S. is not a primary role of banks and financial intermediaries in supporting economic growth and development domestically.

How Do Banks and Financial Intermediation Support Economic Growth and Development