The Main Reason Why Banks Are the Leading Source of External

Multiple Choice

The main reason why banks are the leading source of external finance for businesses is

A) the interest rates on bank loans are usually lower than interest rates on corporate bonds.
B) banks have an information-cost advantage in reducing adverse selection problems.
C) interest paid on bank loans is deductible against the corporate income tax, whereas interest paid on corporate bonds is not.
D) government regulators encourage small businesses to obtain funding from banks.