Latest Activity In Study Groups

Join Your Study Groups

VU Past Papers, MCQs and More

We non-commercial site working hard since 2009 to facilitate learning Read More. We can't keep up without your support. Donate.


Money and Banking (MGT411)

GDB No. 1

Government Safety Net


Due Date: July 31, 2018                                                                                                         Marks: 5


Learning Objective:


The objective of this question is to enable the students to understand the functions and objectives of Central Bank and how they work for a stable economic and financial system.


Discussion Question:


Government is involved in the financial system for three reasons; to protect investors, to protect bank customers from exploitation and to ensure financial system stability. Liquidity risk and information asymmetry directs the instability of financial system. Thus government officials use different strategies to protect investors and ensure the stability of financial system. They provide safety net to protect small depositors, work as a lender of last resort (usually country’s central bank) by making loans to banks that face sudden deposit outflows and also provide deposit insurance.

As a lender of last resort; Central Bank prevent financial panic or failure of the banks / other solvent institutions experiencing financial difficulty by providing sufficient liquidity so that they can meet withdrawal demands of their depositors. However, the existence of a lender of last resort can only reduce the disorder, but does not eliminate. Keeping this in mind;


  • Do you think that the central bank, as lender of last resort, should also supervise the financial industry? Why or why not?


  • An institution has Rs. 100 million assets (70% as long term assets) and Rs. 85 million liabilities (out of which 40% are deposits) facing high rate of withdrawal on its demand deposits. It contacts lender of last resort and requests a loan to bridge the gap. Do you think lender of last resort should grant the loan? Support your answer with logical reasoning. 


Important Instructions:

  1. Your discussion must be based on logical facts.
  2. The GDB will remain open for 07 working days.
  3. Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
  4. Obnoxious or ignoble answer should be strictly avoided.
  5. Questions / queries related to the content of the GDB, which 

Views: 421

Replies to This Discussion

please upload sol

please upload sol

Please Discuss here about this GDB.Thanks

Our main purpose here discussion not just Solution

We are here with you hands in hands to facilitate your learning and do not appreciate the idea of copying or replicating solutions. Read More>>

Discussed & be touched with this discussion. After discussion a perfect solution will come in a result at the end.



For Important Helping Material related to this subject (Solved MCQs, Short Notes, Solved past Papers, E-Books, FAQ,Short Questions Answers & more). You must view all the featured Discussion in this subject group.

For how you can view all the Featured discussions click on the Back to Subject Name Discussions link below the title of this Discussion & then under featured Discussion corner click on the view all link.

Or visit this link 

Click Here For Detail.


.•°How to Download past papers from study groups°•.


Please Click on the below link to see…

.... How to Find Your Subject Study Group & Join .... 


P.S:    Please always try to add the discussion in proper format title like “CS101 Assignment / GDB No 01 Solution & Discussion Due Date: ___________”


Looking For Something? Search Below

VIP Member Badge & Others

How to Get This Badge at Your Profile DP


Management: Admins ::: Moderators

Other Awards Badges List Moderators Group

Latest Activity

© 2021   Created by + M.Tariq Malik.   Powered by

Promote Us  |  Report an Issue  |  Privacy Policy  |  Terms of Service