Which of the following is true of a bank-based system?

Question

Quizplus · Accepted Answer

In a bank-based system, banks are the main financial intermediaries and are more involved in corporate governance. This results in managers having longer investment horizons and being less willing to take risks. Poorly performing firms may not necessarily be penalized through corporate takeovers as banks may provide them with support to improve their performance. The ratio of domestic deposits in banks to stock market size can vary and is not necessarily less than 1. Financial markets may still exist, but they play a lesser role in the system compared to banks.

Which of the Following Is True of a Bank-Based System