What advantage allows larger businesses to borrow funds more easily and cheaply?

Financial Economies of Scale refer to the advantages that larger businesses have in securing funding at lower costs due to their size and perceived stability. Larger firms typically have more assets, established credit histories, and stronger market positions, making them more attractive to lenders. This increased confidence from financial institutions can result in lower interest rates and more favorable borrowing terms compared to smaller businesses, which may be viewed as higher risk due to their limited resources or shorter operating history.

In contrast, operational economies of scale focus on cost savings achieved by producing goods more efficiently as production volume increases. Investment economies of scale deal with the benefits of larger investments yielding higher returns, while negotiation economies of scale refer to the advantages gained in bargaining power during negotiations. However, these do not specifically address the borrowing capabilities that come with being a larger business. The correct choice clearly highlights the financial benefits that enhance a larger firm's ability to access funds affordably.