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Economics of Money, Banking, and Financial Markets - Essay Example
Finance & Accounting
Pages 6 (1506 words)
Banking and the management of financial institutions Name College Course Date Abstract A bank is a financial institution which offers loans to borrowers and is responsible for gathering for the liquidity need for its borrowers and depositors. These are the two functions that distinguish banks from other institutions even though banks get involved in other activities other than the two specified…
We will look at the role and how banks channel this money from agents who want to deposit and agents who are in need of money and want to borrow. The role of the bank is very important because they channel funds towards financing investments that are productive. Introduction Financial institutions are very essential in accelerating developments. For developments to be achieved, people have to invest and for people to invest they must save. People therefore can only safe if there are places to save and can invest if there are financial institutions to lend them money to invest. Financial institutions therefore play a key role because they take money from people who want to save and they don’t keep them but lend them to others on the other side who invest in the development programs (Schroeck, 2002). There has to be a process of financial development. Financial development occurs through the process of economic development. In some cases, financial developments are first put in place then steering development growth and in others, the growth of the economy and business lead to a need for a financial institution to sustain it. ...
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