How Banks Help The Economy
A bank is a financial institution that is involved in borrowing and lending money. It is a business and nothing more. Some banks may be aggressive, and some may be conservative in their approach to business. A bank will usually take deposits in return for paying an annual interest on that deposit. The bank then uses the majority of these deposits to lend to other customers in the form of loans. the difference between the interest rates of your deposit and the interest rate they get from the loans they give out would be the profit margin for them. Bank more than any other offer a chance for people to open businesses which they would otherwise not be able to build on their own. They offer a safe way for you to save your money without you having your own personal vault or lugging it around on your person.
A World Without Banks?
If we lived in a world without banks, we would probably still bartering items or services for food or worse hurting each other to get what we want. Banks have made it possible for us to use money to acquire services and goods. Chaos would be everywhere if not for banks. Think about where you can borrow money, how would you start a business, how would you save or keep your money? The real question is, would there be even money if there were no banks?
How Many Banks Are There?
How many Banks are there in the world? How many US banks are there? The figure would be that there are about 20,000 banks in the world, and 8000 of those are in the US. The US figures predominantly in this as they have the most more or less stable economy. Considering the world population, the figure is actually a bit underwhelming, but these banks are very important to the economy.
How Banks Help the Economy
Through the process of taking deposits and making loans available, the banking system helps channel the funds from borrowers to savers and vice versa in an efficient manner. Savings range from hundreds to millions of dollars in temporary savings, not to mention the millions more who benefit from credit cards and other specialized loans from the banks. The loans, especially commercial and industrial loans help shape an entire country’s economic growth. Thes are made possible by partially funding projects which can be repaid in longer periods. The infrastructure that is built out of this will then cause more people to be employed creating a cascade and domino effect for the better. Banks also provide home loans, student loans and personal loans that benefit the grassroots economy. On the bigger scale, they help control inflation and provide better utilization money.
IN the modern economic world of today banks are the backbone and in many ways the infrastructure with which the economy is built on. Without banks, there would simply be no economic order and and whole economies would collapse.