Question

Alzuria is a developing economy. With trade and​ liberalization, the country has now seen substantial development in the private sector.​ However, government intervention in certain markets remains strong. The banking sector has a good mix of both private banks and those called​ "government undertakings," or public sector banks. Consumers are becoming increasingly aware of the difference in the quality of service provided by the private and the public sector banks. Competition among private banks has ensured that their employees adhere to high standards of customer service. Their public sector​ counterparts, however, do not appear to be making an effort to improve their customer service. Which of the​ following, if​ true, would explain the rationale behind continued patronage despite the bad service provided by public sector banks in​Alzuria?
A. Deposits with public sector banks are insured unlike those with private banks.
B. Private sector banks provide funds at a lower rate of interest than public sector banks.
C. Compensation in public sector banks is lower compared to private banks.
D. Deposits with government sector banks yield a lower rate of interest than private sector banks.
E. Private sector banks provide fringe benefits like price discounts on credit card usage in popular stores.

Answer 1

Deposits with public sector banks are insured unlike those with private banks , would explain the rationale behind continued patronage despite the bad service provided by public sector banks in​ Alzuria.

Explanation:

Even today, the interesting debate between a private bank and a public sector is currently underway. Although private banks are generically favoured by the young generation, public sector banks usually stick to the old generation.

This decision needs to be considered even more closely when it gets down to loans as the closing of a savings bank account does not make it so easy to leave a bank loan. This particularly happens when long-term loans such as household loans or education loans are involved. Therefore, the positive and negative aspects of both public and private banks should be carefully evaluated before making the decision.