Do you think that removing the impediments to a nationwide banking system will be beneficial to the economy? Explain.

Q: In which economic conditions would a central bankwant to use a “forward-guidance” strategy? Based…

A: Forward guidance refers to the communication from the central bank regarding the prevailing state of…

Q: What is shadow banking? What are the backstops in shadow banking and traditional banking? Please…

A: Shadow banking is unregulated where the lenders, creditors, brokers, and other financial…

Q: How does bank chartering reduce adverse selectionproblems? Does it always work?

A: A financial institute that takes deposit from and provides loan to the customers is termed as the…

Q: How did Office Smart increase its market share—possibly by lowering credit st

A: : Credit standards: Credit standards can be defined as a set of guidelines existing in the company…

Q: In your opinion, do we still need a regulator if the banks are collapsing anyway?

A: Federal and state governments have various organizations set up that control and administer…

Q: 3. Consider the monetary neutrality. Suppose that the central bank changed the money supply.…

A: Money Neutrality is an economic theory which states that the change in the supply of money or stock…

Q: what is ADVANTAGES AND DISADVANTAGES OF THIS MORATORIUM  in banking to  BANKS . Give an example

A: MORATORIUM- is an option available to borrower to defer the EMI payment. During the moratorium…

Q: We think of banks as being interest rate intermediaries. That is, the borrow cheaply, and then lend…

A: Following are the types of risk faces by banking industry other than interest rate:

Q: what is ADVANTAGES AND DISADVANTAGES OF THIS MORATORIUM FOR THE BANKS AND BORROWERS? provide…

A: A moratorium is a temporary cessation of activity until future circumstances necessitate its lifting…

Q: What is the bad result if a cashless society increases more private currency?

A: A cashless society is an economic situation during which financial transactions are administered…

Q: If the bank decides to cut down on interest expenses by reducing its dependence upon borrowed funds,…

A: We have to figure out the policy the bank must follow if it decides to cut down on interest expenses…

Q: open

A: Open market operations refer to the act of purchasing or selling the securities of the government by…

Q: do you think that the collaboration between Central Banks and Government creates challenges for…

A: If a country's economy were a human body, the central bank would be its heart. And, just as the…

Q: what are the advantages and drawbacks for digital Technology: How It Could Transform the…

A: Digital technology is referred as an usage of an advanced communication as well as information…

Q: Discuss the potential market failure in the diamond model of banking regulations

A: The diamond model in banking is also known as the dual principle-agent relationship model because it…

Q: Its difficult for payments bank to survive in long run ?

A: Payment banks- Meaning Carry out most of the banking operations but are not allowed to provide loans…

Q: What are the advantages and disadvantages of direct lending for the bank? How are banks reducing the…

A: Direct lending refers to a type of lending that is provided directly by the lender, such as a bank,…

Q: Why will bank never opt for the rejection of payment of LC to exporters bank?

A: A Letter of Credit or Credit Letter refers to a assurance letter given by the bank to its buyer that…

Q: Why is granting credit riskier in an international context?

A: The term credit refers to selling goods on credit by the business top its customers i.e. instead of…

Q: What are the disadvantages of the financial intermediaries and the negative ways they can impact the…

A: A financial intermediary is that entity that acts as a middleman in a financial transaction taking…

Q: ial Markets he

A: Help of financial markets : For the both private and public sector enterprises, the financial market…

Q: Why would the U.S. government consider reinstitutingthe “wall” between investment banking and…

A: A commercial bank is a financial institution which provides various financial services like…

Q: What are the major flaws with NPV? What are the major flaws with IRR? If you are going to a bank and…

A: Major flaws with NPV:Requires an assumption of discount rate which is not directly observable in the…

Q: Why is the bank important to our society?

A: The bank is highly important to our society. It should be noted that banks, on an overall basis, are…

Q: What is the difference between technology risk and operational risk? How does internationalizing the…

A: Every investment carries a certain level of risk, defined in finance as the extent of uncertainty…

Regulation of Commercial Banks

The main function of any commercial bank is accepting deposits and lending money to borrowers. Apart from these two activities, commercial banks provide a host of other services to their customers, like discounting bills of exchange, acting as a custodian of a customer's will, and so on. In the absence of a proper regulatory framework or proper regulations in place, the commercial banks would have ended up charging exorbitant or varied rates of interest or service charges on the funds loaned by them or the services performed by them.