The purpose of fractional reserve banking is to:
a. give potential borrowers more options for securing short-term
bank loans.
b. prevent banks from charging unfair interest rates to small
businesses.
c. give banks the ability to make loans greater than the value of cash
deposits
d. combine the financial services of both commercial and retail
banks

Question

21-06-2022
Social Studies

contestada

The purpose of fractional reserve banking is to:
a. give potential borrowers more options for securing short-term
bank loans.
b. prevent banks from charging unfair interest rates to small
businesses.
c. give banks the ability to make loans greater than the value of cash
deposits
d. combine the financial services of both commercial and retail
banks

Respuesta :

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okpalawalter8 okpalawalter8 · Answer 1 · 2022-06-27T18:02:16+02:00

The purpose of fractional reserve banking is to: give banks the ability to make loans greater than the value of cash deposits. Option C. This is further explained below.

What is fractional reserve banking?

Generally, fractional reserve banking is simply defined as a system known as "fractional reserve banking," deposits are only partially insured by readily accessible funds.

In conclusion, Fractional reserve banking allows financial institutions to lend more than they have on deposit.

Read more about fractional reserve banking

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