English
Tamil Nadu Board of Secondary EducationHSC Commerce Class 12

What is credit creation? - Economics

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Question

What is credit creation?

Answer in Brief

Solution

Credit Creation means the multiplication of loans and advances. Commercial banks receive deposits from the public and use these deposits to give loans. However, loans offered are many times more than the deposits received by banks. This function of banks is known as ‘Credit Creation’.

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Chapter 6: Banking - Model Questions [Page 123]

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Samacheer Kalvi Economics [English] Class 12 TN Board
Chapter 6 Banking
Model Questions | Q 22. | Page 123

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