banking

Question 1

commercial banks

Answer 1

financial institutions that accept deposits and other valuables from the general public with the aim of making profits

Question 2

functions of commercial banks

Answer 2

issuance of bank statements
acceptance of deposits [savings, currents, or fixed deposit]
safekeeping of valuables
lending [loand and overdraft]
provision of financial advice

Question 3

acceptance of deposits

Answer 3

commercial banks accept money from people who have an account with them. types of accounts: savings, current fixed deposit

Question 4

savings accounts

Answer 4

for low / average income earners.
attracts interest on it
condition: you must have an account with the bank

Question 5

current account

Answer 5

for average/ high income earners
operates using a checkbook/ATM
no interest on it
there are bank charges on money once you spend it

Question 6

fixed deposit account

Answer 6

for people who have excess money
money is kept in the bank for a fixed amount of time and interest is placed on it however, if you take out the money before the time is up, there is no interest on it.

Question 7

loan

Answer 7

the consumer does not have to be a member of the bank before receiving a loan, however, the consumer must meet the requirements which are:

• means of payment of the loan
• security or collateral

Question 8

overdraft

Answer 8

when the consumer is allowed to withdraw more than what is in his / her account and pay back with interest however, there’s no collateral as the consumer already has an account with the bank.

Question 9

issuance of bank statements

Answer 9

commercial banks have the ability to issue bank statements to anywhere the consumers send it to. e.g embassy

Question 10

provision of financial advice

Answer 10

there is a department in commercial banks that aids their consumers on what they can invest their money on or what they can do with it.

Question 11

central bank

Answer 11

a national bank that provides financial and banking services for its country’s government and commercial banking system, as well as implementing monetary policies and issuing currency

Question 12

functions of central banks

Answer 12

implementing monetary policies
issuing currency
serves as a banker to the government
operates as a banker to the commercial banks
the 'lender of last resort'

Question 13

implementing monetary policies

Answer 13

monetary policies use interest rates to reduce or increase circulation

Question 14

issuing currency

Answer 14

central banks do not print money but issue new currency to commercial banks by replacing old currency with new currency [enabling a means of exchange]

Question 15

serves as a banker to the government

Answer 15

central banks are the only banks responsible for keeping government money. they collect money on behalf of the government but sends it to the commercial bank.

Question 16

operates as a banker to commercial banks

Answer 16

central banks are banks where all commercial banks must save their money

Question 17

it is the ‘lender of last resorts’

Answer 17

‘lender of last resort’ means that the central banks only loan money when there is an economic crisis