According to the credit theory of banking: 1.banks create deposits when they make loans 2.banks receive...
According to the credit theory of banking:
1.banks create deposits when they make loans
2.banks receive deposits and multiply those deposits through the loan creation process
3.Central bank reserves' most important funtion is to meet reserve requirements
4.Banks can become insolvent by not making loans
5.Banks create loans and fund those loans through loans from the central bank
What is answer?
Homework Answers
Credit theory of banking proposes that individual banks can create money, and banks do not completely lend out deposits that have been provided to the bank. But the bank creates bank deposits as a consequence of bank lending.it mobilise the available fund to gain more profit.
Answer - Bank recieve deposits and multiply those deposits through the loan creation process.
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According to the credit theory of banking:
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