Professional Documents
Culture Documents
Unit 15
Unit 15
• FINANCIAL INTERMEDIARIES
OTHER FUNCTIONS OF COMMERCIAL
BANKS
• Travellers cheque
• Change foreign currency
• Purchase and sale of shares
• Mortgage loans
• AIMS OF COMMERCIAL BANKS:
• Make profit for its shareholders
• Loans(advances)
• Liquidity-withdraw money from their accounts
• Banks have to keep certain amount- liquid assets- turn
into cash quickly and without incurring loss.
• Long term loans- get interest
Banking and islam
• Muslim countries- commercial banks are not
allowed to charge interest on bank loans
• Consider interest as SIN(usury)
• Lend to them in return for a share in their profits
• Other banks:
• Investment banks(merchant banks)- act as a
banker to large firm
• Saving banks
CENTRAL BANKS[world- federal reserve bank of the
USA called Fed, europe-ECB & in UK- bank of england