Question

In: Finance

Below is a paragraph written by a new intern at your bank highlighting the various aspects...

Below is a paragraph written by a new intern at your bank highlighting the various aspects of a bank’s role in the economy as well as the products and services it offers to enhance the economy.

In direct financing, savers and borrowers would definitely need banks to channel their funds. Borrowers look for safety and liquidity as they borrow and which occurs when their total receipts exceed its total expenditures. Maturity transformation is generally when, savers/depositors are willing to lend smaller amounts of money than the amounts required by borrowers. Borrowers perform risk transformation by specializing in a specific type of loans and market. Direct debits are used to pay a fixed amount at regular intervals into the account of another individual or company. Debit transfers are payments where the customer instructs the bank to transfer funds directly to the beneficiary’s bank account. Disintermediation was one of the results of the issues that the banking sector faced over the past decade. Overdraft facilities and credit lines are examples of guarantees given by bank to their corporate clients. Reregulation is the process of implementing new rules, removing restrictions and controls. Banks are said to mismatch their assets and liabilities under size transformation when borrowing long and lending long. Banks are said to mismatch their assets and liabilities under size transformation when borrowing long and lending long.

Required:

Since you find that the above paragraph does not accurately reflect the role of banks, rewrite the paragraph reflecting on your knowledge a bank’s role in the economy as well as the products and services it offers to enhance the economy.

Solutions

Expert Solution

Ans: Banks play a vital role in the growth of a economy and individual growth as it creates a cycle of savings by accepting the money from the normal public and giving a return over the same in the form of interest on fixed deposits, recurring deposit accounts etc creating a savings in the economy which can further be used for investment and production of goods and services and on the other hand they provide different type of secured and unsecured loans like home mortgage , Car Loan, Personal loan, credit cards etc   helping in increasing the consumption and creation of capital and current assets for a company they act as a linking pin where they act as a guarantor as well as provide liquidity for the money of investor and depositors and helps in creation of investment and consumption by providing the credit facilities to the individuals and corporate for their financial needs.

             They helps in matching the flow of funds in a economy by providing long term sources of fund to the corporate and Home mortgage in turn creates employemt,investment in the economy and they provide various type of credit facilities like

  • Overdraft Facililities : It helps a organisation and individuals to meet their short term finance requirement of their day to day business and needs over which the bank use to charge a interest over the same.
  • Credit Cards : For the individual customer a credit card is provided which helps them to consume more than their current income is and help them meet their short term liability.
  • Car Loan : A car loan is provided to finance the cars which the individuals are interested to buy and make them pay in a low monthly emi .It use to be medium term of finance
  • Mortgage Loan : It is provided on the home as it use for a long term finance for a tenure of 15 to 25 years.

And there are certain savings instruments like

  • Fixed Deposits
  • Recurring Deposits
  • Bonds etc

Apart from it banks have a specialise team which help them to create a match in their assets and liabilities be it borrowing short or long and lending for a short and long they are able to manage it very well with the specialization with them.

                                                                    As the banks have adopted to the technological change , which has lead to virtual banking where a individual can full fill all his transaction as well as product needs from a common platform of internet banking reducing the burden of retail branches to focus more on their business and increasing the coverage of banking in the economy as a whole acting as a backbone for a growth of a growth of any country.


Related Solutions

Please write a well written paragraph in your own words on the question below based off...
Please write a well written paragraph in your own words on the question below based off Southwest Airlines. Thank you QUESTION: Referencing Southwest Airlines summarize how you would make decisions about booking a flight from both a Functional & Psychological perspective per each of the steps reviewed in the decision making process?
Given the following situation below, make an OB history. It must be written in paragraph form,...
Given the following situation below, make an OB history. It must be written in paragraph form, using the format presented in the module. Place you answer here in this platform. Do not attach a file but answer on the space provided below. Situation: Cristina is a 29 year-old woman, 16 weeks pregnant, who comes for a first prenatal visit.She is concerned because she didn’t realize she was pregnant until a week ago. Because of this, she has been actively dieting...
Answer please the Question below with your own words - WRITTEN FORM - Written means that...
Answer please the Question below with your own words - WRITTEN FORM - Written means that it is typed here not as a picture 2) In a 1953 study of stock prices, what did Maurice Kendall find and what does it mean in terms of the EMH? Explain 2.1) Even if the markets are efficient, you can find a job as a professional portfolio manager. How is that possible?
Think about the various aspects of your identity. If I were to ask you to make...
Think about the various aspects of your identity. If I were to ask you to make a list of 10 of the most important parts of your identity what would they be? (Religion? Ethnicity? Gender? Occupation?) How difficult is it to make this list? Why do some people find it hard while others find it easy? What did you learn about yourself?
Part 4: Discuss in one paragraph which aspects of your roller coaster would realistically make sense...
Part 4: Discuss in one paragraph which aspects of your roller coaster would realistically make sense in the real world and which aspects would not. Make sure you refer to graphs you used in your answer. Looking at the example below, explain why your function roller coaster cannot have a loop.
A bank wants to know if the enrollment for new savings accounts has improved at various...
A bank wants to know if the enrollment for new savings accounts has improved at various branches after offering a free iPhone X to customers. Use the data from "iphoneX" sheet in excel Run the appropriate statistical test with α=0.05. Which of the following are correct? More than one answer is possible. There was a decrease of 0.7 people enrolled on average in a new savings account after offering a free iPhone X. There was an increase of 0.7 people...
Online research: where should you base your business? Do internet searches on various aspects of this...
Online research: where should you base your business? Do internet searches on various aspects of this question, such as which is the best state to incorporate in from a tax standpoint? Which state is most supportive of entrepreneurs? Which state has employment laws and regulations that are favorable to companies? Which state has the lowest cost of living? Etc.
What is your opinion or observation to the paragraph below? Also, answer the question: Do you...
What is your opinion or observation to the paragraph below? Also, answer the question: Do you think that if there is an improvement to public relations, such as, safer gun controls to prevent shooting accidents, cigarette and drug control, etc, that the cost of the public health could decrease not only in the state of NY, but in the nation as a whole? It does not surprise me that the support and regulate business fund is one of the largest...
can You please paraphrase the below paragraph and write it according to Your own words and...
can You please paraphrase the below paragraph and write it according to Your own words and in a very simple way. Also, i want You to add more information in it and relate it do the dental hyegen the below theory is about Reasoned Action The attitudes are based upon beliefs and evaluations. Hence these are person's own beliefs as said above. Let us take e.g. of improving health hence person's own knowledge of nutrition, risk factors, his belief on...
This week we will discuss the aspects of distribution when launching your new V Fusion. See...
This week we will discuss the aspects of distribution when launching your new V Fusion. See this link https://www.campbells.com/v8/ for more information. As you consider distribution, address the following items: Is distribution an important element of the marketing mix? What value does it add to the product? Describe one of the three major distribution strategies with an example. Discuss whether that strategy is successful including your rationale. Provide a real life example of channel conflict and discuss why the conflict...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT