A Key Finding of the Economic Analysis of Financial Structure

Multiple Choice

A key finding of the economic analysis of financial structure is that

A) the existence of the free-rider problem for traded securities helps to explain why banks play a predominant role in financing the activities of businesses.
B) while free-rider problems limit the extent to which securities markets finance some business activities,nevertheless the majority of funds going to businesses are channeled through securities markets.
C) given the great extent to which securities markets are regulated,free-rider problems are not of significant economic consequence in these markets.
D) economists do not have a very good explanation for why securities markets are so heavily regulated.