How in your opinion, credit creation by the commercial banks, accelerates the pace of economic growth. write two observations?
Answers
Answer:
yes
Explanation:
becoz,credit can make a person free to buy or sell. this free sense can accelerate the pace of economic growth.
Economists generally agree that economic development and growth are influenced by four factors: human resources, physical capital, natural resources and technology. Highly developed countries have governments that focus on these areas.
and all this we can get from money and mind.
The literature provides evidences that there is a correlation between economic growth and credit market. An increase in the allocation of capital accelerates growth leading to long-run economic growth.
examples:-
1.An independent judicial system—Independent courts with fully developed commercial and bankruptcy laws.
2.Licenses and Permits—In order to produce, distribute and manage credit, banks and financial institutions should operate within a set of regulations that impose conditions for the volume and price of credit, and that determine which corporations, entities or individuals can access it. Banks and financial institutions must be licensed within the context of governance to which all parties subscribe.
Answer:
Credit creation by the commercial banks, accelerates the pace of economic growth in following ways
1) A person could not carry much money with him self as it is risky and a man cannot carry much money with him so debit card plays a vital role as it is easy and portable to carry and it is cashless we can pay easily by it.
2) Carrying a large amount of money is difficult as well as it has a risk to be robbed if the credit card is lost by a person any one can not take money from it as it requires personal PIN number and by reporting bank we can get a new credit card.