Majority of the people have assumed the basic view of banks throughout the world. They think of banks as the places only to store money, transfer their amount, get a card or get a loan granted. But beyond this narrow viewpoint there is totally other broad perspective behind banks. The banks which are responsible to maintain a financial systems and stable economy of a nation.
The well-developed banking system commonly known as commercial banks. Commercial banks were found in between 1933 to 1999. These commercial banks tends to play significant role in developing industries and trade of a nation. They function not only as a caretaker of your wealth but also as the source to regulate a nation.
Impacts of Commercial Banking System on Nation’s Economy
Commercial banks works as the tycoons of finance for a country. They tends to help and facilitate individuals as well as huge organizations. Commercial banking have increased the living standard of the people by providing various services to them. They help in mobilizing the funds from general public and lend them to burrowers. Here are some more impacts of commercial banks which improves and effects the nation’s economy:
1. Finance Development
Commercial banks are solely focused on generating capitals for regulating the economy of a nation. These banks tends to deposit savings of public from different regions of the country and compile it into a big capital used for a greater cause.
2. Mechanism of productive investments
Finance or capital development is not the only purpose of a commercial bank. Allocating the funds and mobilizing the capital for productive investments is the utmost purpose of commercial banks. This not only give the chances to earn profits for the bank but also benefits the nation with different projects.
3. Promotes privileged industries
While allocating the loans and funds to an individual or an organization. Banks makes sure that the loan is extended to the right party and the right person. Bank checks the credibility of the product and services offered by the company. The company should have proper set up and working capacity to get the loan granted.
4. Finance For government
Governments of third world countries requires huge loans to initiate or establish any business, industry or progress work. A well-develop bank of a nation may lend loans to such government by investing some funds in government securities of such states. In return they may have long-term benefits on interest from the government.
5. Banking Business
After the commercialization of banks it become a huge industry which opened doors of employment to millions of bankers. These commercial banks have branches all over the country to facilitate the maximum amount of people. To regulate these branches bank creates hiring opportunity for people.
6. Business Opportunities or Credit Creation
Commercial banks create credits for providing more financial assistance in the form of funds and loans for the project development. Lending funds for creating a new business, promoting sales of a company and granting loan to expand a business. This leads the economic development faster of a nation.