banking
BANKING
Definition of Banking:
According to Crowther, a bank
"Collects money from those who have it to spare or who are saving it out of their incomes, and it lends this money to those who require it."
In the words of Kinley,
"A bank is an establishment which makes to individuals such advances of money as may be required and safely made, and to which individuals entrust money when not required by them for use."
According to John Paget, "Nobody can be a banker who does not (i) take deposit accounts,
(ii) take current accounts, (iii) issue and pay cheques, and (iv) collect cheques crossed and uncrossed for its customers."
R.S. Sayers defines the terms bank and banking distinctly. He defines a bank as,
"An institution whose debts (bank deposits) are widely accepted in settlement of other people's debts to each other."
In short, the term bank in the modern times refers to an institution having the following features: i). It deals with money; it accepts deposits and advances loans. ii). It also deals with credit; it has the ability to create credit i.e., the ability to expand its liabilities as a multiple of its cash reserves. iii). It is commercial institution; it aims at earning profit. iv). It is a unique financial institution that creates demand deposits which serve as a medium of exchange and, as a result, the banks manage the payment system of the country. Functions of Commercial Banks:
A commercial bank acts as an intermediary between savers and investors. It mobilises the dormant savings of the public in form of deposits. Such money is lent for productive purposes to trade, industry and agriculture. It accepts deposits of various types and grants loans for a variety of purposes. Normally commercial bank grants loans only for short-periods as most of its deposits can be withdrawn on demand.
Banks play a useful and important role in the economic life of every nation. They have control over a large part of the supply of money in
Definition of Banking:
According to Crowther, a bank
"Collects money from those who have it to spare or who are saving it out of their incomes, and it lends this money to those who require it."
In the words of Kinley,
"A bank is an establishment which makes to individuals such advances of money as may be required and safely made, and to which individuals entrust money when not required by them for use."
According to John Paget, "Nobody can be a banker who does not (i) take deposit accounts,
(ii) take current accounts, (iii) issue and pay cheques, and (iv) collect cheques crossed and uncrossed for its customers."
R.S. Sayers defines the terms bank and banking distinctly. He defines a bank as,
"An institution whose debts (bank deposits) are widely accepted in settlement of other people's debts to each other."
In short, the term bank in the modern times refers to an institution having the following features: i). It deals with money; it accepts deposits and advances loans. ii). It also deals with credit; it has the ability to create credit i.e., the ability to expand its liabilities as a multiple of its cash reserves. iii). It is commercial institution; it aims at earning profit. iv). It is a unique financial institution that creates demand deposits which serve as a medium of exchange and, as a result, the banks manage the payment system of the country. Functions of Commercial Banks:
A commercial bank acts as an intermediary between savers and investors. It mobilises the dormant savings of the public in form of deposits. Such money is lent for productive purposes to trade, industry and agriculture. It accepts deposits of various types and grants loans for a variety of purposes. Normally commercial bank grants loans only for short-periods as most of its deposits can be withdrawn on demand.
Banks play a useful and important role in the economic life of every nation. They have control over a large part of the supply of money in