explain the impact of increase in bank rate on credit creation by commercial banks
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Heya...
Bank rate is the rate at which RBI gives loan to the commercial banks ..
@@ Increase in bank rate by commercial bank....
--->>> If the bank rate will increase then the loan intrest rate will raise ...
---->>> Commercial bank discourage to take loan from RBI..
---->>> It reduces the credit creation capicity of commercial banks....
----->>> Thus , the intrest on loan to general public will increase it leads to less formation of loans....
----->>> Decrease money supply in economy....
Bank rate is the rate at which RBI gives loan to the commercial banks ..
@@ Increase in bank rate by commercial bank....
--->>> If the bank rate will increase then the loan intrest rate will raise ...
---->>> Commercial bank discourage to take loan from RBI..
---->>> It reduces the credit creation capicity of commercial banks....
----->>> Thus , the intrest on loan to general public will increase it leads to less formation of loans....
----->>> Decrease money supply in economy....
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