Topics: Bank, Commercial bank, Fractional-reserve banking Pages: 3 (1028 words) Published: April 9, 2013
Origin of term ‘Bank’
The term ‘Bank’ is originated from different sources such as Germanic word ‘banck’, the French word ‘beque’ and the Italian word ‘banco’. In German, the word ‘bank’ means a bundle of anything or shared stock fund. The Italian word ‘banco’ refers to a bench at which the money changers used to change one kind of money into another and transact their banking business. Thus, in olden days, banking was associated with the business of money changing or lending. Definition of Bank

Oxford Dictionary defines ‘bank’ as a financial establishment that uses money deposited by customers for investment, pays it out when required, makes loans at interest, and exchanges currency. A Bank is a financial institution that monitors the banking activity. It deals with deposits and advances and other related services such as lending money to grow the economy. Bank acts as bridge between people who save and people who want to borrow money. It receives money from the people who want to save as deposits and it lends money to those who want to borrow it. A bank can be defined through three methods. Firstly, it can be defined by its business entity. Generally, a bank is chartered by a federal or state government. The business entity must include the word “bank” or “trust” in the name of business entity such as Hong Leong Bank, Public Bank and Bank Simpanan Nasional. Secondly, it can be defined by the services offered. Generally, a bank accepts deposits and makes loans. However, it may also provide other services. The example of bank which can be defined by this method is Skim Simpanan Pendidikan Nasional (SSPN). Thirdly, it can also be defined by its economic function. Banks are financial intermediary which allows diversification, economies of scale, expertise on transactions, convert illiquid investments to liquid ones, and a safe place to store money. The examples of bank which can be defined by this way are KWSP, Bursa Saham Malaysia and Tabung Haji....
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