Question

Passage:
In mid-nineteenth-century Britain, the implementation of limited liability laws for joint-stock companies was intended by proponents to democratize investment by encouraging small savers to fund speculative industrial enterprises without risking personal ruin. However, legal historians note that early limited liability entities rarely attracted small-scale retail investors. Instead, capital aggregation was dominated by affluent elites who utilized the statutory liability cap primarily to diversify existing portfolios across multiple high-risk ventures rather than risk total exposure in a single firm. Crucially, contemporary bankruptcy court records reveal that creditor protections, which previously allowed lenders to claim personal assets of partners in un-incorporated partnerships, were not replaced by mandated minimum capital requirements for limited liability firms until decades later. Consequently, creditors faced heightened default risks, prompting them to demand higher interest rates on corporate debt. This risk premium effectively offset the lowered cost of equity capital for emerging firms. Furthermore, while unlimited liability partnerships continued to operate in traditional sectors like private banking, their access to capital markets gradually contracted as investors increasingly favored limited liability options despite the higher borrowing costs borne by those firms.

Which of the following can be most logically inferred from the passage regarding British corporate finance during the mid-nineteenth century?