What Is The Role Of Banks?

A bank basically is business which offers economic services for profit. Banks play an important part in stabilizing the economy. Conventional banking services comprise of receiving deposits of cash, lending cash and processing transactions. Quite a few banks provide supplementary fiscal services to generate additional profit, like promoting insurance products, investment products or stock broking, etc. Banks have an extended history, and have influenced the financial system and politics for ages. Normally a bank makes profits from transaction fees charged on financial services as well as from the amount of interest it charges for lending money.

A bank normally gathers funds by drawing deposits, collecting money in the inter-bank market, or by distributing financial instruments in the money market or a capital market. The bank usually lends out these collected funds to borrowers.