Question

discuss the role of banks as financial institutions that fuel the economic growth of a nation

Answer 1

  Banks are doing a great job for the development of the economy. Usually banks performs as an intermediary institution that who collects money from the public and lending that money for the business. They are the one who mobilise the money from the public and distribute into the economy. This is how the development of the economy is happend.The efficiency is the keyfactor here. They properly collect and maintain the funds and then allocate the funds in each sector of the economy. This lending leads to economic development because due to this flow of money only the business is growing. For the growth of the industries there should be proper funds and these banks will provide adequate funds for the smooth running of these sectors.

There should be healthy transactions for the development or growth of the economy. Because the borrowers should be trustworthy and they should repay the amount they borrow from the bank. The main reason of successful banking is depends upon the good creditors.There should be healthy lending and repaying of the funds should be ensured. If the banks did not get repayed then it will affect all transaction. Every company needs working capital for running the business or in other words we can said banks will helps for capital formation. So for this they will borrow money from the bank and bank get inerest as return. This fund will use in the form of working capital and by using this fund they can can operate the business. Apart from this banks will provide different kinds of loans for agricultural and farming activities and it ensures there will be proper facilities for this. Then another bigger role of banks is in international trade. Banks act as an intermediary of domestic and international market or economy. So we can understand that banks are providing different kinds of activities for the development and growth of the economy.

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