An increase in Legal Reserve Deposit Ratio increases the credit creation power of the commercial banks ( banking system ). True/False? Give reason.
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Increase in statutory liquidity ratio adversely affects the capacity of commercial banks to create credit. Ans: True. An increase in statutory liquidity ratio reduces the excess reserves of commercial banks and limits their credit creating power.
Answered by
1
Answer:
Increase in statutory liquidity ratio adversely affects the capacity of commercial banks to create credit. Ans: True. An increase in statutory liquidity ratio reduces the excess reserves of commercial banks and limits their credit creating power.
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