In this article we will discuss about the various financial assets of a commercial bank. Liquidity and Profitability: In order to be able to meet demands for cash as and when they are made a bank must not only arrange to have sufficient cash available but it must also distribute its assets in such a way that some of them [...]
The following points highlight the role of commercial banks in developing the economy. The roles are: 1. Accelerating the Rate of Savings and Capital Formation 2. Mobilisation of Resources and Granting of Adequate Credit for Development 3. Credit for the Priority Sectors 4. Involvement in Development Planning 5. Strengthening Institutional Facilities 6. Promoting Growth with Stability. Role # 1. Accelerating [...]
This article will guide you about how commercial banks create credit (money). The money supply of a country consists of notes and coins in circulation and bank deposits. The government itself can create money by issuing more notes and coins through its central bank. However, (commercial) banks can also create money by creating bank deposits. Let us examine how this [...]