Describe the role of a ‘Commercial Bank’ in an economy.

Question
  • A. To regulate the money supply
  • B. To act as intermediaries between savers and borrowers
  • C. To issue currency
  • D. To collect taxes
View Answer

correct Answer ( B )

commercial banks play a vital role in an economy by acting as intermediaries between savers and borrowers. They accept deposits from individuals and businesses and provide loans for various purposes such as personal consumption, business expansion and housing ; this process facilitates the flow of funds within the economy, enabling investment and economic growth . Commercial banks also offer a range of other financial services, such as payment processing, investment banking services and foreign exchange transactions ; their activities contribute to the overall efficiency and stability of the financial system, supporting economic development and prosperity

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