Practice IBPS PO 2023 Prelims Question Paper – 23 Sep 2023 Shift 4 (Memory-Based, with Solutions)

Read the passage to answer the given questions.

Shadow banking (SB) has been an essential and largely disputed issue in finance literature for over a decade. Its macroeconomic implications and institutional-level importance have made it a fascinating area of study. After the Global Financial Crisis of 2007–2008 (GFC), scholars, legislators had SB in their sights. Many scholars have argued that the GFC initially sprouted from the SB sector, and that SB was the main culprit in the crisis. The SB sector’s vulnerability was in its financing of risky, long-term, and illiquid assets with short-term borrowings, resulting in a breakdown in the credit market that forced SBs to sell long-term holdings at fire-sale prices. However, some studies argue that SBs were not entirely responsible for the sub-prime mortgage crisis during the GFC. Moreover, SBs may be a key to mitigating damages if a liquidity crisis caused by traditional banks arises in the future. As the future of SB and the new financial innovations within the SB sector hangs in the balance, some suggest taming the wild horse. On the other hand, some say that if SB remains unregulated or is regulated differently than the traditional banking sector, it will bring about the next global financial crisis.

The term “shadow bank” was coined by economist Paul McCulley. In McCulley’s talk, shadow banking had a distinctly US focus and referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation. Commercial banks engage in maturity transformation when they use deposits, which are normally short term, to fund loans that are longer term. Shadow banks do something similar. They raise short-term funds in the money markets and use those funds to buy assets with longer-term maturities. But because they are not subject to traditional bank regulation, they cannot—as banks can—borrow in an emergency from the Federal Reserve (the US central bank) and do not have traditional depositors whose funds are covered by insurance; they are in the “shadows.”

Which of the following is the antonym of ‘culprit’ as highlighted in the given passage?

Read the passage to answer the given questions.

Shadow banking (SB) has been an essential and largely disputed issue in finance literature for over a decade. Its macroeconomic implications and institutional-level importance have made it a fascinating area of study. After the Global Financial Crisis of 2007–2008 (GFC), scholars, legislators had SB in their sights. Many scholars have argued that the GFC initially sprouted from the SB sector, and that SB was the main culprit in the crisis. The SB sector’s vulnerability was in its financing of risky, long-term, and illiquid assets with short-term borrowings, resulting in a breakdown in the credit market that forced SBs to sell long-term holdings at fire-sale prices. However, some studies argue that SBs were not entirely responsible for the sub-prime mortgage crisis during the GFC. Moreover, SBs may be a key to mitigating damages if a liquidity crisis caused by traditional banks arises in the future. As the future of SB and the new financial innovations within the SB sector hangs in the balance, some suggest taming the wild horse. On the other hand, some say that if SB remains unregulated or is regulated differently than the traditional banking sector, it will bring about the next global financial crisis.

The term “shadow bank” was coined by economist Paul McCulley. In McCulley’s talk, shadow banking had a distinctly US focus and referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation. Commercial banks engage in maturity transformation when they use deposits, which are normally short term, to fund loans that are longer term. Shadow banks do something similar. They raise short-term funds in the money markets and use those funds to buy assets with longer-term maturities. But because they are not subject to traditional bank regulation, they cannot—as banks can—borrow in an emergency from the Federal Reserve (the US central bank) and do not have traditional depositors whose funds are covered by insurance; they are in the “shadows.”

How do some experts view the future of shadow banking in relation to mitigating damages from a liquidity crisis?

Read the passage to answer the given questions.

Shadow banking (SB) has been an essential and largely disputed issue in finance literature for over a decade. Its macroeconomic implications and institutional-level importance have made it a fascinating area of study. After the Global Financial Crisis of 2007–2008 (GFC), scholars, legislators had SB in their sights. Many scholars have argued that the GFC initially sprouted from the SB sector, and that SB was the main culprit in the crisis. The SB sector’s vulnerability was in its financing of risky, long-term, and illiquid assets with short-term borrowings, resulting in a breakdown in the credit market that forced SBs to sell long-term holdings at fire-sale prices. However, some studies argue that SBs were not entirely responsible for the sub-prime mortgage crisis during the GFC. Moreover, SBs may be a key to mitigating damages if a liquidity crisis caused by traditional banks arises in the future. As the future of SB and the new financial innovations within the SB sector hangs in the balance, some suggest taming the wild horse. On the other hand, some say that if SB remains unregulated or is regulated differently than the traditional banking sector, it will bring about the next global financial crisis.

The term “shadow bank” was coined by economist Paul McCulley. In McCulley’s talk, shadow banking had a distinctly US focus and referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation. Commercial banks engage in maturity transformation when they use deposits, which are normally short term, to fund loans that are longer term. Shadow banks do something similar. They raise short-term funds in the money markets and use those funds to buy assets with longer-term maturities. But because they are not subject to traditional bank regulation, they cannot—as banks can—borrow in an emergency from the Federal Reserve (the US central bank) and do not have traditional depositors whose funds are covered by insurance; they are in the “shadows.”

How did the Global Financial Crisis of 2007–2008 impact shadow banks?

Read the passage to answer the given questions.

Shadow banking (SB) has been an essential and largely disputed issue in finance literature for over a decade. Its macroeconomic implications and institutional-level importance have made it a fascinating area of study. After the Global Financial Crisis of 2007–2008 (GFC), scholars, legislators had SB in their sights. Many scholars have argued that the GFC initially sprouted from the SB sector, and that SB was the main culprit in the crisis. The SB sector’s vulnerability was in its financing of risky, long-term, and illiquid assets with short-term borrowings, resulting in a breakdown in the credit market that forced SBs to sell long-term holdings at fire-sale prices. However, some studies argue that SBs were not entirely responsible for the sub-prime mortgage crisis during the GFC. Moreover, SBs may be a key to mitigating damages if a liquidity crisis caused by traditional banks arises in the future. As the future of SB and the new financial innovations within the SB sector hangs in the balance, some suggest taming the wild horse. On the other hand, some say that if SB remains unregulated or is regulated differently than the traditional banking sector, it will bring about the next global financial crisis.

The term “shadow bank” was coined by economist Paul McCulley. In McCulley’s talk, shadow banking had a distinctly US focus and referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation. Commercial banks engage in maturity transformation when they use deposits, which are normally short term, to fund loans that are longer term. Shadow banks do something similar. They raise short-term funds in the money markets and use those funds to buy assets with longer-term maturities. But because they are not subject to traditional bank regulation, they cannot—as banks can—borrow in an emergency from the Federal Reserve (the US central bank) and do not have traditional depositors whose funds are covered by insurance; they are in the “shadows.”

What has made shadow banking a fascinating area of study in finance literature?

Read the passage to answer the given questions.

Shadow banking (SB) has been an essential and largely disputed issue in finance literature for over a decade. Its macroeconomic implications and institutional-level importance have made it a fascinating area of study. After the Global Financial Crisis of 2007–2008 (GFC), scholars, legislators had SB in their sights. Many scholars have argued that the GFC initially sprouted from the SB sector, and that SB was the main culprit in the crisis. The SB sector’s vulnerability was in its financing of risky, long-term, and illiquid assets with short-term borrowings, resulting in a breakdown in the credit market that forced SBs to sell long-term holdings at fire-sale prices. However, some studies argue that SBs were not entirely responsible for the sub-prime mortgage crisis during the GFC. Moreover, SBs may be a key to mitigating damages if a liquidity crisis caused by traditional banks arises in the future. As the future of SB and the new financial innovations within the SB sector hangs in the balance, some suggest taming the wild horse. On the other hand, some say that if SB remains unregulated or is regulated differently than the traditional banking sector, it will bring about the next global financial crisis.

The term “shadow bank” was coined by economist Paul McCulley. In McCulley’s talk, shadow banking had a distinctly US focus and referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation. Commercial banks engage in maturity transformation when they use deposits, which are normally short term, to fund loans that are longer term. Shadow banks do something similar. They raise short-term funds in the money markets and use those funds to buy assets with longer-term maturities. But because they are not subject to traditional bank regulation, they cannot—as banks can—borrow in an emergency from the Federal Reserve (the US central bank) and do not have traditional depositors whose funds are covered by insurance; they are in the “shadows.”

What factor contributed to the vulnerability of the shadow banking sector during the Global Financial Crisis of 2007–2008?

Read the passage to answer the given questions.

Shadow banking (SB) has been an essential and largely disputed issue in finance literature for over a decade. Its macroeconomic implications and institutional-level importance have made it a fascinating area of study. After the Global Financial Crisis of 2007–2008 (GFC), scholars, legislators had SB in their sights. Many scholars have argued that the GFC initially sprouted from the SB sector, and that SB was the main culprit in the crisis. The SB sector’s vulnerability was in its financing of risky, long-term, and illiquid assets with short-term borrowings, resulting in a breakdown in the credit market that forced SBs to sell long-term holdings at fire-sale prices. However, some studies argue that SBs were not entirely responsible for the sub-prime mortgage crisis during the GFC. Moreover, SBs may be a key to mitigating damages if a liquidity crisis caused by traditional banks arises in the future. As the future of SB and the new financial innovations within the SB sector hangs in the balance, some suggest taming the wild horse. On the other hand, some say that if SB remains unregulated or is regulated differently than the traditional banking sector, it will bring about the next global financial crisis.

The term “shadow bank” was coined by economist Paul McCulley. In McCulley’s talk, shadow banking had a distinctly US focus and referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation. Commercial banks engage in maturity transformation when they use deposits, which are normally short term, to fund loans that are longer term. Shadow banks do something similar. They raise short-term funds in the money markets and use those funds to buy assets with longer-term maturities. But because they are not subject to traditional bank regulation, they cannot—as banks can—borrow in an emergency from the Federal Reserve (the US central bank) and do not have traditional depositors whose funds are covered by insurance; they are in the “shadows.”

What is the primary activity of shadow banks that economists refer to as "maturity transformation"?

Read each sentence to find out whether there is any grammatical or idiomatic error in it. The error, if any, will be in one part of the sentence. The letter of that part is the answer. If there is no error, choose “No error”. (Ignore errors of punctuation, if any.)

Despite the challenges, (A)/ I am determined to accomplish (B)/ my all dreams and make a (C)/ positive impact on the world (D).

Read each sentence to find out whether there is any grammatical or idiomatic error in it. The error, if any, will be in one part of the sentence. The letter of that part is the answer. If there is no error, choose “No error”. (Ignore errors of punctuation, if any.)

Her style of fashion (A)/ is truly most unique (B)/ and stands out (C)/from the crowd (D).

Read each sentence to find out whether there is any grammatical or idiomatic error in it. The error, if any, will be in one part of the sentence. The letter of that part is the answer. If there is no error, choose “No error”. (Ignore errors of punctuation, if any.)

India aims to become (A)/ a leading biomanufacturing hub (B)/ with plans to increase (C)/ fermentation capacity tenfold (D)

Read each sentence to find out whether there is any grammatical or idiomatic error in it. The error, if any, will be in one part of the sentence. The letter of that part is the answer. If there is no error, choose “No error”. (Ignore errors of punctuation, if any.)

Each of the students (A)/ in the class (B)/ have submitted (C)/ their assignments on time (D).