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On what basis...

Question

On what basis do commercial banks create credit?

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Solution

The credit creation process of commercial banks is determined by the amount of initial deposits and the cash reserve ratio.

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Similar questions

Q. Commercial banks can create credit on the basis of primary deposit. Explain.

Q. How do commercial banks create credit? Explain with the help of an example.

If the commercial banks buy government securities, their capacity to create credit is reduced. Do you agree?

The central bank controls credit but commercial banks create credit. State true or false.

Q. State with reasons whether you agree or disagree with the following statements.
1. A commercial bank create credit on the basis of primary deposit.
2. Commercial banks perform many general utility services.

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