Banking Concepts Quiz

Why is the interest charged on loans greater than the interest paid on deposits?

• To cover administrative costs and loan losses

• To increase bank profits

• To attract more customers

• To comply with government regulations

What do most large banks engage in today?

• Only commercial banking

• Only investment banking

• Both commercial and investment banking

• Only retail banking

How do most consumers use local branch banking services?

• For onsite customer service for all retail banking needs

• For international trade financing

• For stock market investments

• For cryptocurrency transactions

How many building societies are there in the UK?

• More than 30

• More than 45

• More than 60

• More than 75

Which of the following is a secondary function of banks?

• Savings deposits

• Overdraft

• Transfer of funds

• Fixed deposits

What type of deposit is considered a primary function of banks?

• Drafts lockers

• Current deposits

• Underwriting

• Project reports

What is another term for the reserve requirement?

• Deposit ratio

• Loan ratio

• Reserve ratio

• Asset ratio

What is the role of the central bank in most countries regarding bank credit creation?

• It sets interest rates for loans.

• It regulates bank credit creation by imposing reserve requirements and capital adequacy ratios.

• It provides loans to banks.

• It determines the exchange rate.

Which of the following is a primary function of commercial banks?

• Granting loans

• Issuing currency

• Regulating monetary policy

• Collecting taxes

What is the main purpose of a capital adequacy ratio for banks?

• To set loan interest rates

• To limit the number of branches

• To increase customer deposits

• To ensure banks have enough capital to absorb losses