Which institution performs the activity of credit creation?
Which institution (s) performs the activity of credit creation?
(a) Commercial banks
(b) Central Bank
(c) Both (a) and (b)
(d) Neither (a) nor (b)
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Ans – (a)
Explanation:-
It is one of the most important activities of commercial banks. Through the process of money creation, commercial banks are able to create credit, which is in far excess of the initial or Primary Deposits.
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