Question 58
BankingWhich of the following enhances the lending powers of commercial banks?
- A.High bank rate
- B.Increased cash reserve ratio
- C.Provisions for bad and doubtful debts
- D.Decreased liquidity ratio
- E.Increased capital base
Show the answer and explanation
Answer: D (Decreased liquidity ratio)
Explanation
If banks must keep less of their deposits as liquid assets, they have more to lend.