Economics
Topics
Credit creation
Credit creation is the process by which commercial banks are able to create loans in the form of new deposits. Limits to credit creation by banks Market forces – these influence the number of profitable lending opportunities. Regulatory policies e.g. higher capital reserve requirements imposed by a central bank might limit lending Behaviour of consumers and businesses - e.g. decisions about how much of their debt to repay. Monetary policy – the level of monetary policy interest rates influences the demand for loans from households and businesses including demand for business loans and mortgage loans in the housing market.
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How do commercial banks create credit?
Student Videos
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The return of low-deposit mortgages
20th January 2021
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Credit: How it is Created (Financial Economics)
Study Notes
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How the magic money tree works
30th October 2017