Examkin

Question

Difficulty: EasyMerchant, Development, and Specialized Banks

In Nigeria, merchant banks are structured to operate as wholesale financial institutions that primarily deal with corporate clients rather than opening retail checking accounts for individual retail depositors.

Answer: Answer

Answer

The statement is True.
The statement is correct because merchant banks are established as wholesale institutions providing investment, corporate financial, and capital market services rather than personal retail banking services.

Step-by-Step Solution

1
Identify the primary operational functions of merchant banks.
Merchant banks focus on wholesale banking, capital market activities, underwriting, corporate financial advice, and medium- to long-term loans.
Understanding institutional functions is key to distinguishing financial intermediaries.
2
Compare merchant bank services with commercial bank retail banking.
Commercial banks accept small retail deposits and operate personal checking/savings accounts, whereas merchant banks are restricted from retail checking services.
This confirms that the statement accurately describes the wholesale nature of merchant banks.

Key Concept

Functions of Merchant Banks
Rate this question

Topics

Merchant, Development, and Specialized Banks

More questions from this topic