In emerging economies in Africa and other regions, large foreign banks that were set up during the colonial era have...
GMAT Critical Reasoning : (CR) Questions
In emerging economies in Africa and other regions, large foreign banks that were set up during the colonial era have long played a major economic role. These institutions have tended to confine their business to the wealthier of banks' potential customers. But development of these countries' economies requires financing of the small businesses that dominate their manufacturing, farming, and services sectors. So economic growth will be likely to occur if local banks take on this portion of the financial services markets, since __________.
Which of the following completions would produce the strongest argument?
Passage Analysis:
| Text from Passage | Analysis |
| In emerging economies in Africa and other regions, large foreign banks that were set up during the colonial era have long played a major economic role. |
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| These institutions have tended to confine their business to the wealthier of banks' potential customers. |
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| But development of these countries' economies requires financing of the small businesses that dominate their manufacturing, farming, and services sectors. |
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Argument Flow:
The argument moves from describing the current banking situation (foreign banks serve only wealthy customers) to identifying what's actually needed for economic growth (financing for small businesses). This creates a clear problem-solution setup.
Main Conclusion:
Economic growth will likely happen if local banks serve the small business market that foreign banks ignore.
Logical Structure:
The logic connects a gap in services (foreign banks don't serve small businesses) with an opportunity (local banks could fill this gap) to reach a conclusion about economic growth. The strength depends on completing the argument with why local banks would be better at serving small businesses.
Prethinking:
Question type:
Logically Completes - We need to find a statement that makes the argument's conclusion (local banks taking over will lead to economic growth) logically follow from the premises.
Precision of Claims
The argument makes specific claims about customer segments (wealthy vs small businesses), banking activities (financing), and economic sectors (manufacturing, farming, services). We need to bridge why local banks would be different from foreign banks.
Strategy
For logically completes questions, we need to find the missing link that makes the conclusion inevitable. The argument sets up: 1) Foreign banks only serve wealthy customers, 2) Economic growth needs small business financing, 3) Conclusion: Local banks taking over this market will cause growth. The missing piece is WHY local banks would be better at serving small businesses than foreign banks.
This actually weakens rather than strengthens the argument. If local banks are less focused on diversification, this suggests they might be less sophisticated or effective than foreign banks, which doesn't support why they'd be better at promoting economic growth through small business financing.
This is the perfect bridge we need. The argument claims local banks taking over small business financing will lead to economic growth, but we need to know that financing these businesses actually produces growth. This choice directly establishes that link: when small businesses get capital, they contribute to economic growth. This makes the conclusion inevitable.
This actually undermines the argument by suggesting foreign banks could solve the problem themselves. If foreign banks can serve small businesses profitably, then we don't need local banks to take over this market for economic growth to occur.
This weakens the argument by suggesting the problem isn't as severe as presented. If some small businesses are already being served by foreign banks, then the gap in services isn't complete, and local banks taking over wouldn't have as dramatic an impact on economic growth.
While this might explain why local banks would be more willing to serve small businesses, it doesn't establish that serving small businesses would actually lead to economic growth. Being less risk-averse could even be seen as potentially problematic for sound economic development.