Adverse selection is a barrier to financing global growth because

Adverse selection is a barrier to financing global growth because

of the differences between financing using loans, portfolio investment and foreign direct investment.

there is the possibility that the funds are used for riskier behavior than the lender agreed to.

firms sometimes have trouble determining whether they need funds or not.

if investors have trouble identifying high-risk firms they may be unwilling to lend funds to creditworthy firms.