Functions of Banks

Commercial banks are a vital part of the economy. They provide many imperative functions that help businesses and consumers alike. In this lesson, we will discuss what these functions are and why they are so essential. We’ll also take a look at how banks work and the different types of services they offer. 

What is a Commercial Bank?

A bank is a financial intermediary that takes deposits from savers and makes loans to borrowers. The banking industry existed for many years before the industrial era when people would deposit their valuables in a safe places such as vaults or safes and expect them back at any time they needed access to it. In modern times, we see banks with customer relations managers who act as intermediaries between customers and the various departments of commercial banks, as well as handle other clerical duties. To perform this task, each department typically has one or more assistants making up an administrative staff under the supervision of an executive assistant (EA) or chief administrative officer (CAO).

Functions of Commercial Banks

In the given section, we have tried to explain the functions of commercial banks:

• The primary function of all banks is to provide liquidity through lending out money to customers
• The Federal Reserve Bank is responsible for regulating the banking system in the United States, and they mandate that banks must keep a fraction of their deposits on hand at all times (called reserves) as a way to prevent bank runs
• When you deposit money into your checking account, the bank can then loan out most of that money to other customers
• This is how banks create money – by lending out more money than they have on hand
• Banks also offer other financial services such as checking and savings accounts, certificates of deposit, debit cards, and credit cards
• They also offer investment products like mutual funds, annuities, and life insurance policies

Many people think of banks only when it comes time to take out a loan, but there are a lot of other services that banks offer that can be very helpful for consumers.

What Is the World Bank?

The World Bank is a global development institution that provides loans to developing countries. It was founded in 1944 and has since provided more than $200 billion in loans to developing countries. The World Bank also offers technical assistance and advice to help developing countries grow their economies.

Functions Of World Bank

The World Bank has three primary functions:

• Providing loans to developing countries
• Offering technical assistance and advice to help developing countries grow their economies
• Serving as a forum for discussing development issues and sharing best practices

Why Do We Need Banks?

First of all, banks play an important role in our economy by providing liquidity to businesses and consumers. This helps keep the flow of money moving and allows businesses to expand and create jobs. Banks also offer valuable financial services that can help people save money and protect their finances. And finally, banks provide investment products that can help people grow their money over time. So while there are certainly some drawbacks to banking (such as high fees), overall banks provide a lot of value to consumers and our economy as a whole.

Conclusion

In this lesson, we’ve explored the various functions of commercial banks. We looked at how they help businesses by issuing loans and providing other financial services. We also discussed the role of central banks in the global economy and their responsibility for maintaining price stability and ensuring liquidity in the banking system.