2016-2017

Realized By:

RHOFLANE ALI
Plan
• 1- Definition and history of Bank

• 2- How bank make their money?

• 3-Types of bank

• 4-Role of bank in the economy

• 5- Conclusion
What is a Bank?
 Bank
• Is an establishment for custody of money, which
it pays out on customer's order.
 History of Bank
• Terminology of the word:

Bank Banco Bench

• They
• Italian placed the
money on
Word a bench
History of Bank
Goldsmith
 History of Bank
Oldest Bank in Italy-Siena
The Bank of England (1695)
(1472)
How banks Create money ?
• Banks basically make money by
lending money at rates higher
than the cost of the money they
lend. More specifically, banks
collect interest on loans and
interest payments from the debt
securities they own, and pay
interest on deposits, certificates
of deposit (CDs), and short-term
borrowings. The difference is
known as the "spread," or the net
interest income, and when that
net interest income is divided by
the bank's earning assets, it is
known as the net interest margin.
• The interest rate a bank charges its borrowers
depends on both the number of people who want
to borrow and the amount of money the bank
has available to lend. the amount available to
lend also depends upon the reserve requirement
the Federal Reserve Board has set. At the same
time, it may also be affected by the funds rate,
which is the interest rate that banks charge each
other for short-term loans to meet their reserve
requirements.
• Loaning money is also inherently risky. A bank
never really knows if it'll get that money back.
Therefore, the riskier the loan the higher the
interest rate the bank charges.
• Banks also charge fees for services like checking,
ATM access and overdraft protection. Loans
have their own set of fees that go along with
them. Another source of income for banks is
investments and securities.
What are Types of Banks ?
Type 1 : Retail Banks

• Are probably the banks you’re most familiar

with: Your cheking and savings accounts are
held at a retail banks, which focuses on
consumers as customers.
Type 2 : Commercial Banks
• Commercial banks, Or divisions of banks,
provide banking services to businesses, from
small companies through to corporate banking
direct at large corporations.
Type 3 : Investment Banks
• Help businesses work in financial markets. If a
business wants to go public or sell debt, they’ll
use an investement bank.
Type 4 : Central Banks
• Central banks act as regulators of their country’s
interest rates by controlling the amount of
money in circulation and buying and selling
currencies.
Type 5 : Credit Unions
• Are similar to banks, but they are not-for-profit
organizations owned by their customers(Most
banks are owned by investors).
Type 6 : Online Banks
• A system allowing individuals to perfom banking
activities at home, via internet. There are no
physical branch locations to talk with a teller or
personal banker.
Type 7 : Savings and loans
• Are less prevalent than they used to be, but they
are still imporatant. this type of bank was
important in making home ownership
mainstream, using deposits from customers to
fund fome loans.
What is The Role of banks in the economy ?
Role 1 : Banks Promote capital formation
the banks accept deposits from individuals and
businesses these deposits are then made available to
the businesses which make use of then for productive
purposes in the country.
Role 2 : investment in new businesses
Businessmen normally hesitate to invest their money in
risky busnisses. the banks generally provide short and
meduim term loans to contractors to invest in new
busnisses and adopt new methods of production.
Role 3 : promotion of trade and industry :
With the growth of commercial banking there is vast
expansion in trade and industry.
The use of bank draft, check, bill of exchange, crédits
cards and letters of crédits etc.. Has revolutionized both
national and international trade.
Role 4 : Development of agriculture
The commercial bank particulary in developing countries
are now providing crédit for development of agriculture
and small scale indusctries in rural areas.
The provision of crédit to agriculture sector has greatly
helped in raising agriculture productivity and income of
the farmers.
Role 5 : Balanced development of different
regions
The commercial banks play an important role in
achieving balanced development in different
regions of the country.
This in turn increases investment, trade and
production in the economy.
Role 6 : Influencing economic activity

The banks can also influence the economic activity

of the country through its influence on

a. Availability of credit
b. The rate of interest
Role 7 :Implementation of Monetary policy
The central bank of the country controls and
regulates volume of credit through the active
cooperation of the banking system in the country.
Role 8 : Monetization of the economy
The commercial banks by opening branches in the
rural and backward areas are reducing the
exchange of goods through barter.
The use of money has greatly increased the
volume of production of goods.
Role 9 : Export promotion cells
In order to increase the exports of the country, the
commercial banks have established export
promotion cells.
They provide information about general trade and
economic conditions both inside and outside the
country to its customers.
 Conclusion
What Banks are doing! Economic activities of Banks

• Accept deposits, • Issuing money,

• Make loans, • Settling payments,

• Act as payment agents • Credit intermediation,

between merchants and banks,
and • Maturity transformation, and

• Provide a safe place for money • Money creation in the form of

valuables fractional reserve banking.
Thank you for your attention