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प्रश्न
State with reason whether you agree or disagree with the following statement.
A commercial bank create credit on the basis of primary deposit.
उत्तर
No, we disagree with the given statement. Commercial banks can create credit only out of derivative deposits. Derivative deposit is the amount of deposits left after deducting the cash reserve from primary deposits. Suppose bank A receives a total deposit of Rs.10, 000, with mandatory cash reserve of 10%, then after keeping a sum of Rs.1000, he can loan out the remaining Rs. 9000 to others. Suppose, he gave the credit to a person who deposits it in bank B. Bank B also kept 10% of Rs. 9000 i.e. it kept Rs. 900 as a reserve and loaned out the remaining sum (Rs. 8100) to an individual who deposits it in bank C. Bank C further loaned out Rs. 7290, after keeping Rs. 810 as reserve. In this way, it can go on an infinite number of times and the credit goes on being created. Hence, we can say that the commercial bank creates credit from the derivative deposit and not from the primary deposits.
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संबंधित प्रश्न
Explain the primary functions of commercial banks.
A bank is an institution which deals in money and _____________
(commodity money/credit/barter/standard money)
Explain the agency function of commercial banks.
State whether the following statement is true or false:
Central bank also performs commercial banking business.
Distinguish between the following :
Quantitative and Qualitative measures of credit control.
Explain with reason, whether you agree or disagree with the following statement:
Commercial banks perform agency functions to earn profit.
Fill in the blank using proper alternatives given in the bracket:
.................consumption cannot be zero.
Fill in the blank using proper alternatives given in the bracket:
The primary function of commercial banks is to ...................
Fill in the blank with appropriate alternatives given in the bracket :
Commercial banks create __________.
State whether the following statements are TRUE or FALSE:
Commercial banks play an important role in economic development.
Write answers in ‘one’ or ‘two’ paras each.
What are the primary functions of commercial banks?
Write explanatory notes or answer the following.
Explain the primary functions of Commercial bank.
Define or Explain the concept
Current deposit
State whether the following statements are True or False with reason:
Interest rate is more for fixed deposits.
Distinguish between:
Central Bank and Commercial Bank
Fill in the blank with appropriate alternatives given below
__________ is a primary function of commercial banks.
Fill in the blank with appropriate alternatives given below
Facility of E-banking is provided through __________
State whether the following statement is True or False.
Commercial banks are the backbone of modern economy.
State whether the following statement is True or False.
There is no difference between primary deposit and secondary deposit of a commercial bank.
Define explain the following concept.
Fixed deposits
Define explain the following concept.
Cash credit
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Commercial banks provide agency functions to earn profits.
Distinguish between:
Call loans and long term loans
Distinguish between:
Current account and saving account
Write short note on:
D-mat account
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Explain various types of deposits.
Answer the following question:
What are the different types of loans provided by commercial banks?
What are the primary functions of commercial banks?
Answer in detail:
Explain the process of credit creation.
State whether the following statement is True or False :
Loans given by banks for a period of less than five years is known as long - term loan.
State with reason whether you 'agree' or 'disagree' with the following statement.
Credit creation of commercial banks is based on primary deposits.
Explain the functions of a commercial bank.
Bank credit refers to ______.
What are the important features of a capitalist economy?
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Which of the following are the agency functions of commercial banks?
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Demand deposits include ______
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Agricultural Developmental Bank of Pakistan uses the production function approach for measuring bank outputs and costs. A translog cost function is estimated to provide an assessment of the bank's scale and scope efficiency, and to quantify the extent to which its production costs are sensitive to the size and output mix. Results show that the bank enjoys both overall and product-specific economies of scale and, therefore, there exists scope for the bank to expand its operations at a declining average cost. Even though bank branches in all size categories enjoy economies of scale, the extent of such economies is larger for branches operating at a smaller scale of production. This implies that as the bank branches grow larger in size in terms of both loan and deposit accounts, they move closer to attaining increasing returns to a factor. It is also shown that the marginal costs of servicing both loan and deposit accounts decline as bank branches grow larger in size in terms of either the number of loans or the number of deposits. This confirms that branches operating at a larger scale of production have attained greater cost-efficiency in terms of servicing the loan and deposit accounts.
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| 1 | Money | (a) | Supply of Money |
| 2 | Commercial Bank | (b) | Store of Value |
| 3 | Central Bank | (c) | Credit Control |
| 4 | M4 | (d) | Circulation of Money |
Railways is an example of:
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- Demand Deposits
- Time Deposits
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