Which institution(s) performs the activity of credit creation?

Commercial Banks

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Central Bank

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Both (a) and (b)

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Neither (a) nor (b)

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Solution

The correct option is A Commercial Banks
Commercial Banks performs the function of credit creation. It is one of the most important activities of commercial banks.

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Similar questions

List - I (Activity of bank)	List - II (Function performed)
A. Bank of Issue	1. Provision of liquidity to the financial institution which is facing difficulty in getting credit. Generally, the lender is the central bank.
B. Custodian of foreign balances of the country	2. Government delegates the right to print currency notes
C. Lender of last resort	3. It maintains both gold and foreign currencies as reserves
D. Controller of credit	4. It controls credit operation of commercial banks

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