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What is the most significant way the lending function affects the economy of its community or...

What is the most significant way the lending function affects the economy of its community or region?
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Answer #1

The lending function or the ability of bank to give credit to the society is a very important indicator of overall economic growth. When there is a credit growth, it means that the economy is picking up and more people are taking loans. It means that more people are economically stronger and have the ability to take loans. Not only to take loans, but also to pay back the loans.

Therefore, a higher credit growth (higher lending) is an indicator of economic growth in that region and a lower lending function is an indicator of economic de-growth in that particular region.

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