By; Rodney Hunter
It’s important to understand the role of other bank departments and employee functions from many different aspects. A world without banking institutions would calmly mistaken the economy in many different ways. If there were no banks, where would you go to borrow money? What would you do with your savings? Would you be able to borrow (save) as much as you need. Banks operate by borrowing funds usually by accepting deposits or by borrowing in the money markets. Banks borrow from individuals, businesses, financial institutions, and governments with surplus funds (savings). They then use those deposits and borrowed funds (liabilities of the bank) to make loans or to purchase securities. Banks make these loans to businesses, other financial institutions, individuals, and governments. Interest rates provide the price signals for borrowers, lenders, and banks. The U.S. financial services industry and financial markets are highly developed. In recent decades, many new products and services have been created, as well as new financial instruments and institutions. Today, in addition to banks, there are several other important types of financial intermediaries. These include savings institutions, credit unions, insurance companies, mutual funds, pension funds, finance companies, and real estate investment trusts. Finally, Commercial banks play an important role in the financial system and the economy. They provide specialized financial services, which reduce the cost of obtaining information about both savings and borrowing opportunities. These financial services help to make the overall economy more efficient.
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