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What are the limitations of credit creation by banks ? |
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Answer» Following are the limitations of credit creation by banks : 1. Level of development of banks : The countries in which the level of development of banking services is not adequate, credit-creation facility is also limited there. 2. The attitude of public : The banking habit of people also has a direct impact on capacity of credit creation. 3. Monetary policy of central bank : Liberal monetary policy encourages credit creation in a country. 4. Level of development in business and industry : Those countries which have attained higher level of industrial development, the banking transactions in these countries are higher, and thus, they have high creation capacity. |
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