Q. Consider the following statements:
1.Digitalisation consistently boosts the traditional credit channel of monetary policy by increasing the number of bank loans.
2.Digitalisation makes it harder for consumers to compare prices and make purchasing decisions.
3.Digitalisation can create interconnected financial system with implications for financial stability.
Which of the statement(s) given above is/are correct?
Explanation –
Statements 1 and 2 are incorrect. Digitalisation can sometimes weaken the traditional credit channel by reducing reliance on bank loans in favour of alternative financing methods such as equity financing, digital lending platforms, or crowdfunding. Hence, it does not consistently or always boost the traditional credit channel. Digitalisation typically makes it easier for consumers to compare prices and make purchasing decisions by providing access to online price comparisons, reviews, and information.
Statement 3 is correct. Digitalisation can lead to greater interconnectedness in the financial system through various digital platforms and innovations, which can impact financial stability by increasing the potential for systemic risks.
Source: The Hindu
