Commercial banks and their essence | Private Finance 

Commercial banks and their essence

Commercial banks and their essenceTo consider the nature of commercial banks it is impossible, without having considered their function, that is it and consists in their functions. If to speak about functions, it is possible to allocate one of the most important, consisting in mediation in the credit, carried out thanks to redistribution of money which are liberated on rather short period in a circulation of funds of the enterprises, and also the income received by individuals.

Features of mediatorial function

Mediatorial functions possess the feature, being that resources are redistributed at the expense of the main criterion – profitability of use by their borrower. The property is redistributed in the horizontal plane of economic communications, that is from the creditor to the borrower. Intermediaries for this purpose are banks, thus intermediate links in it not учувствуют, in their role other bank structures can act. Supply and demand of debt funds forms a payment for the given and received loans. That is why financial resources freely move in this system.

Stimulation of accumulation in an economy

Also commercial banks possess the function, allowing to stimulate accumulation in an economy. It consists in the following:
• The majority of commercial banks possess the flexible depositary policy, allowing to form incentives accumulating and saving up money.
• The savings which are available in an economy should be most mobilized.
• Creditors of bank need high guarantees of reliability of a room where the saved-up resources are stored. But also they need high percent which are paid on deposits.
• Guarantees can be only when the fund of insurance of assets of establishments of bank, and also deposits of commercial banks is created.

Such banks always differ that as anything else can essentially increase production efficiency that is provided at the expense of performance of banks as intermediaries in implementation of redistribution of the capitals. The market structure cannot do without banking systems today. Banks both commodity production and the address always went a foot to a foot in the development, cooperating with each other. For this reason they treat category of the business enterprises called special, which thanks to this their began to call financial intermediaries.

Leave a reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>