What are the advantages of a banking sector in an economy?

Answer 1

Banks today have a lot of investment in many areas. They give car loans so if more cars are sold they make money. They sell insurance so with more cars more insurance is needed and they invest in housing so they also sell the insurance for houses. They also have the mortgage industry and make money when a loan for a house is made. They loan companies money to business and make money off the interest they charge. If you use a credit card you are making a loan from a bank. Have a checking account and they charge for the account and charge for a overdraft of money in the account. Use a ATM there is a fee. All of this money goes back into the economy in some way.

Answer 2

Commercial banks cater to normally individuals and businesses, dealing with their loans and deposits. As opposed to an investment bank, which mainly deals with using customers' money to invest, commercial banks engaged in lending to customers and businesses. The most important function of commercial banks lies in the fact that it acts as a mechanism of wealth redistribution. It takes money from those who do not need it and lends it to someone who needs it. These banks are cornerstones of the economy, since such large parts of the economy, both individual and in the private sector, are driven by debt. Their lending allows people to leverage, meaning borrowing money from the bank to magnify their operations. They also keep the money supply liquid, meaning people can get money when they need to.

Answer 3

What are the advantages of a banking sector in an economy