Banks in Developing Economies Are Less Willing to Lend to Small

question 19

Multiple Choice

Banks in developing economies are less willing to lend to small firms because:

• A)of higher loan default rates.
• B)interest rates charged cover transaction costs.
• C)of lower adverse selection.
• D)of lower moral hazard.

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Definitions:

Specialised Equipment

Machinery or devices designed for a particular purpose or industry, often requiring specific knowledge or skills to operate.

Replacement Cost

The amount of cash or cash equivalent required to replace an asset at its current or similar utility.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Employee Benefit Liabilities

Obligations owed by an employer to its employees as part of an employee benefit program, such as pensions, post-retirement health benefits, and other forms of deferred compensation.