Which of the following implies that small FIs are more cost efficient than large FIs,and that in a freely competitive environment for financial services,small FIs 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 occur when a firm becomes too large, causing it to experience increasing costs per unit of output. This suggests that smaller FIs may be more cost-efficient than larger ones. In a competitive environment, small FIs may be able to use their cost advantage to offer better prices, more personalized services, or better innovation, resulting in better performance compared to their larger counterparts.

Which of the Following Implies That Small FIs Are More