Which of the following statements is a key difference between customer loans and interbank loans?

Which of the following statements is a key difference between customer loans and interbank loans?
A . Customers are less credit-worthy than banks on average and hence yields are higher on average for customer loans as compared to interbank loans
B . Customer loans are of shorter duration than interbank loans
C . Customer loans are easier to sell than interbank loans
D . Interbank loans are more customized than commercial loans

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Answer: A

Explanation:

The key difference between customer loans and interbank loans is related to creditworthiness and yield. Customers are generally less credit-worthy than banks, leading to higher yields on customer loans compared to interbank loans. This higher yield compensates lenders for the increased risk associated with lending to less credit-worthy borrowers.