Question

What is meant by credit allocation regulation? What social benefit is this type of regulation intended to provide?

a) Allocating credit based on credit scores, promoting financial inclusion
b) Restricting credit access, ensuring economic stability
c) Encouraging credit expansion, promoting economic growth
d) Mandating credit allocation to specific sectors, achieving social goals

Answer 1

Credit allocation regulation is a process of directing banks to allocate credit to specific sectors to achieve social goals. It promotes economic growth and social benefits by addressing issues such as financial inclusion and income inequality.

Step-by-step explanation:

Credit allocation regulation refers to the process of mandating credit allocation to specific sectors in order to achieve social goals. It involves directing banks or financial institutions to allocate a certain proportion of their lending to targeted sectors such as agriculture, small businesses, or affordable housing.

This type of regulation is intended to provide social benefits by promoting economic growth and addressing social issues. By mandating credit allocation to specific sectors, the regulation aims to enhance financial inclusion, reduce income inequality, and support the development of underserved areas or industries.