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“It is always claimed by the commercial banks in the economy that their Net-Worth  fall sharply when Central bank adopt the contraction monetary policy in the periods of high inflation in the economy. What do you think is this right or wrong? Give comments in its favor or against.


solve it.............



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Replies to This Discussion

Please discuss Here about this GDB. Thanks
waiting for the answer
its just an opinion

"i disagree because when central bank adopt contraction monetary policy they actually are trying to reduce the circulation of money from the economy to cure inflation, in that case they 'll increase the interest rates, which will encourage depositors to deposit more and more and discourage the public to get loans (because rates will be to high). so with the increase in deposits net worth of commercial bank will increase because net worth = total debts+equity."
plz comment on this reply...
ur right and very nice one


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