The reason why the financial system entails some externalities is because

Question

ObjectiveMcq · Accepted Answer

the incentives of the managers of financial institutions, at times, conflict with those of its shareholders, depositors, and society in general.

ObjectiveMcq · Answer

the incentives of the managers of financial institutions are, at times, in line with those of its shareholders, depositors, and society in general.

ObjectiveMcq · Answer

they usually make very large profits.

ObjectiveMcq · Answer

if managed correctly, financial institutions will never be the source of externalities.