What is the system of banking?

 

The banking system
Systems of Banking


What is the system of banking?

A banking system or system of banking is a network of groups or organizations that provide financial services to us. These institutions are responsible for managing payments, providing loans, accepting deposits and assisting in investments. The functions of a commercial banking system may include accepting deposits, approving loans, providing checking and savings accounts, and providing credit and debit card services.

Whenever a large number of entities or corporations come together and form a system it is known as a banking system. They perform their specific functions in the fundraising and resource allocation resources in the economic and financial markets.

The main purpose and explanation of the existence of this sector is that it is necessary to be in charge of certain agencies to conduct financial intermediation activities. Thus, it is possible that financial money has moved from one place to another by adjusting to certain risks and deadlines that characterize reality.

The bank is responsible for its own activities and nature in obtaining financial and financial resources through a large number of instruments built for such purposes as bonds, deposits, or obligations.

Alternatively, this system of entities is responsible for facilitating their clients' access to these firms through banking tools such as clients and mortgages, in exchange for prior agreement on interest or commission on each activity.

In that sense, at an early stage of the study, it can be defined that the interest collected is the bank's profit, at the same time facing a series of expenses derived from the interest that it instead pays to its own creditors. The difference between the two variables is known as the profit or margin of a bank, to give a general example.

The evolution of the concept of banking has evolved throughout history, especially as it presents its nature in different civilizations from ancient Egypt. However, the rise of money as a means of payment was due to the rapid evolution of the banking business, which reached its formal establishment in the modern era and in the Renaissance.

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