Advertisements
Advertisements
Question
Identify the following Credit Control measures undertaken by the Central Bank during inflation.
The Central Bank increases the rate at which it lends to the Commercial Bank.
Advertisements
Solution
Increasing the lending rate to commercial banks is referred to as increasing the Bank Rate. By increasing the bank rate, the cost of borrowing for commercial banks rises, leading to higher lending costs for businesses and consumers. This reduces the effects of inflation.
APPEARS IN
RELATED QUESTIONS
Define bank rate.
The rate of which commercial banks borrow from the Central Bank is the:
The process of buying and selling of securities by the central bank of a country is known as ______.
Define the term Statutory Liquidity Ratio.
State the impact of an increase in Cash Reserve Ratio on loanable funds.
Differentiate between quantitative and qualitative methods of credit control.
Define the following term:
Cash Reserve Ratio.
Briefly explain the following credit control method adopted by the Central Bank.
Publicity
Which are qualitative methods of credit control?
Give an example of margin requirements.
