Which of the following does not Affect Credit Creation of Commercial Bank.

  1. Cash Reserve Ratio
  2. Statutory Liquidity Ratio
  3. Capital Adequacy Ratio
  4. cash deposit Ratio
Monis Rasool Professor Asked on 10th September 2015 in Finance.
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    Capital Adequacy Ratio

    Capital Adequacy Ratio does not affect credit creation of Commercial bank. Capital adequacy ratios are a measure of the amount of a bank’s capital expressed as a percentage of its risk-weighted credit exposures.
    Capital Adequacy Ratio = (Tier l capital + Tier ll capital ) / Risk-weighted assets

    The minimum capital adequacy ratio that apply are:

    • tier one capital to total risk weighted credit exposures to be not less than 4 percent;
    • total capital (tier one plus tier two less certain deductions) to total risk weighted credit exposures to be not less than 8 percent
    Monis Rasool Professor Answered on 12th September 2015.
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