Which of the following statements is true regarding Emerging Market Economy (EME) banks?

The statement that Emerging Market Economy (EME) banks have a lower availability of long-term fixed-rate funding sources is accurate. In emerging markets, financial systems tend to be less developed compared to advanced economies. This results in various challenges, including limited access to long-term capital markets and a higher reliance on short-term borrowing.

One of the primary reasons for the lower availability of long-term fixed-rate funding is the volatility and economic uncertainty often present in emerging markets. Investors and financial institutions may be hesitant to commit to long-term loans or financing due to potential changes in the economic environment, inflation rates, and currency fluctuations. As a result, EME banks often find it challenging to secure stable, long-term funding, which can impact their lending practices and overall financial health.

In contrast, advanced economies typically have more developed financial markets and a broader range of funding instruments that offer long-term fixed financing, allowing banks to better manage interest rate risk and provide more diverse lending options to their customers.