Question

As a financial intermediary, Oman Arab Bank is contributing to the economic development of a country” Why Oman Arab Bank is called financial intermediary and what is their contribution to the economic development of a county?

Answer 1

Answer - Omar Arab Bank or any other bank is called the financial intermediary as it perform the job of the pooling of the funds and channelising the savings on behalf of depositor. It also has the responsibility of acting as a link between the customer and Central bank and implement its policies .

It accepts the deposits from those who want to save and provides loan to borrowers for productive activities .

With the help of the multiplier process , under the fractional reserve system , the bank is able to create money many times in comparison to the initial deposit . This is called the money creation and takes place with the help of money multiplier mechanism.