[amp_mcq option1=”Shadow Banking” option2=”Universal Banking” option3=”Unit Banking” option4=”Narrow Banking” correct=”option2″]
The correct answer is: B. Universal Banking
Universal banks are financial institutions that offer a full range of financial services, including commercial banking, investment banking, mutual funds, and merchant banking. They are typically large, multinational banks with a global reach.
Shadow banking is a term used to describe the loosely regulated financial system that exists alongside the traditional banking system. It includes entities such as hedge funds, private equity firms, and money market funds.
Unit banking is a system of banking in which each bank is a separate legal entity. It is the opposite of branch banking, in which a bank has multiple branches.
Narrow banking is a system of banking in which banks are restricted to providing basic financial services, such as checking and savings accounts. It is the opposite of universal banking, in which banks offer a full range of financial services.
Here is a brief explanation of each option:
- Shadow Banking is a term used to describe the loosely regulated financial system that exists alongside the traditional banking system. It includes entities such as hedge funds, private equity firms, and money market funds. Shadow banks are not subject to the same regulations as traditional banks, which can make them more risky.
- Unit Banking is a system of banking in which each bank is a separate legal entity. It is the opposite of branch banking, in which a bank has multiple branches. Unit banking is more common in rural areas, where it can be difficult to support a large branch network.
- Narrow Banking is a system of banking in which banks are restricted to providing basic financial services, such as checking and savings accounts. It is the opposite of universal banking, in which banks offer a full range of financial services. Narrow banking is designed to reduce the risk of bank failures.