Question

What are the factors that affect the demand for and supply of call loans?

Answer 1

Answer:

A call loan is a loan which a lender can demand to repay anytime. The lender has the power to call the loan repayment, not the borrower.

The factors which influence the demand and supply of call loans are:

1. The call money rate or market interest rate of short-term loan.
2. The supply of money decreases with the repayment of a loan.
3. The shift in the supply curve increases or decreases the quantity to be released at a given price.
4. A tight liquidity condition inflates the call money rate and vice versa.
5. The stable economic condition is preferable for call loans to maintain uniform call money rates.  

Answer 2

Answer:

A call loan is provided to the broker dealers and this is a short term loan.

The bank can provide such call loans to the broker dealers for short term and a call loan is also known as broker’s loan.

Brokers can use such loan amount to gain profits from their customers.

Margin accounts with minimum deposit are required for such call loans.