If there were no financial institutions then the users of funds, such as corporations in the...
If there were no financial institutions then the users of funds, such as corporations in the economy, would have to approach the savers of funds, such as households, directly in order to fund their investment projects and fill their borrowing needs.
True
or
False
Homework Answers
Answer : "True"
=> This is because in the absence of the Financial Institutions (including banks), the fund requirements of the corporations of the economy has to accept the deposits from the general public at the settled interest rates to finance their projects. In the current financial environment, it is the financial institutions which connects the public savings and deposits with the fund requisites like corporations and project financers. So, if we eliminate the financial institutions from the financial circuit, then borrowers has to ask for the fund directly to the general public.
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