GCECommerceBanking and Finance2022

The function of a commercial bank that distinguishes it most from other financial institutions is

Agranting of loans and advances to customers
Bacceptance of savings deposits from customers
Cthe creation of credit through the deposit multiplication processCORRECT
Dsafe-keeping of customers' valuables
AI
Toaster Teacher
Why the answer is C, and why the others tempt you.
While commercial banks share many functions with other financial institutions (accepting deposits, granting loans, safe-keeping), the ability to create credit through the deposit multiplier process is the most distinctive function of commercial banks. This means that for every deposit received, banks can create multiple times that amount in loans, effectively expanding the money supply.
Want this in Pidgin, Yoruba, Igbo or Hausa? Sign up free →

Practice more Commerce questions

GCE Commerce has thousands more questions like this — with Worked answers on every one.