Question

Commercial banks play an important role in economic development.

• A. True
• B. False

Answer 1

The correct option is A True

True.

A commercial bank is that financial institution which accepts deposit from people and offers loan for the purpose of consumption or investment. The main function of commercial bank is to create credit through the primary deposits which it receives from the public in order to provide more credit to the public. Due to increase in the creation of credit, the commercial banks are able to loan out money for the purpose of investment in to new projects which results in economic development. Therefore, commercial banks play an important role in economic development.