SEU (surplus economic unit) and DEU (deficit economic unit)

Question

What can a financial institution frequently do for a surplus economic unit that it would encompass difficulty doing for itself if the SEU (surplus economic unit) were to deal directly with a DEU (deficit economic unit)?

Answer 1

SEUs don’t usually have the much knowledge to determine whether deficit economic units will make good on their obligations, so it is quite difficult for them to foresee when a would-be deficit economic unit will not be able to pay what it owes.  Such a failure is likely to be disturbing to a SEU that has lent a quite large amount of money.

A financial institution can very well predict who can pay and who can’t.  It is also good in having greater financial resources and sometimes absorbs a loss when people fail to pay.