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Factors Affecting Banks Are fiscal policy of government about expenditure budget deficit taxes and borrowing affect banking sector. Such government policies regarding economics matters can affect bank and their management division.
Increase in Government Budget
Government increases the budget to expand the size of economic activity. IIncreasein government spending. In general, leads increase in Business and household income which further increases bank deposit as well as loan demand. So this result growth.
Government Borrowing
We need to meet huge spending in a deficit budget. Deficit balance It made by government borrowing. Government borrowing raise fund from government general public which demand s additional loans demand seven in private sector. Mare over additional borrowing and spend ing increases aggregate demand for goods and service which again increases aggregate demand for goods and services earnings ain increases bank deposits and loan. It can minimize in function which may result in a decrease in net earnings. In such condition bank deposits, a loan may decrease.
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