Importance Og Bank

Topics: Economics, Bank, Debt Pages: 4 (1748 words) Published: August 25, 2013
Why banks are important in an economy
Bank is an organization or financial institution whose current operations are accepting deposit money and giving loans (slideshareinc 2012), bank is one of the type of financial intermediary(state of Connecticut). Understandings of a bank are varying, depending on the views of people. In past, bank only place to saving and borrowing money. Now understanding of the bank is growing with the development of the bank function in today's modern life. For example as an executive payment and storage of valuables (Demand Media, inc 2012) The Function of a bank is to ensure the safety and soundness of banks, maintain the efficiency financial structure and financial system, maintain financial balance or stability and secure costumer from abuses (Dileep Mehta and Hung-Gay Fung 2004)On the other side, bank also manages financial in a country (Franklin Allen and Elena Carletti 2008) There are many types of bank, such as saving banks, commercial banks, industrial bank and central bank ( 2012). Differences of bank type will impact to the usage and function of a bank such as central bank can create money to be used in country, but commercial bank or saving bank only can save costumers money that they deposit and give loans to other who need it. Let us look deeper into the Role of a Central Bank in a country, as well as its importance in helping developing countries to have a stable economic growth and for developed countries to maintain its economic growth ( 2012). Bank has a very important role especially in those developing countries. Since the developing countries do not have well-organized money and capital markets, a Central Bank will provide a solution to develop the banking and financial system in the country. Thus, in a long term, Central bank will aim to achieve a stable economic growth for the country as well as internal stability by adopting such a monetary policy that can control...

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