Due to the great importance bank play in the economy, every aspect of banking co is valuable and indeed very important. What is the relevance of this financial sector in the economy, tackling this question will include providing answers to the part that is valuable to individuals, the public and the economy at large. Due to their financial operation the economy of a nation is directly connected to the efficiency of her banking sector. What exactly are these parts and how do banking co affects the nation?
Aspects of banking
Banks as already mentioned is a very important sector in an economy; first, the operation of nation economy resources. All resources, financial and otherwise that come into the country winds up in the bank and by their professionalism they are saddled with the responsibility of ensuring that these resources are kept for good use. By definition, you can say, they are financial institutions responsible for accepting deposits, keeping resources in terms of saving and directing them to loaning operation directly or by capital markets. Therefore the aspect of banking co function lies in the definition. The key terms in the meaning are; saving, accepting deposits, intermediaries, directing, utilizing and resources. Out of these banking operations listed, perhaps the most relevant is savings and loaning operations.
What connect banking and people together is the wise decision to deposit or save their resources in the bank. There are other activities that link individuals or group of company together, example are: accepting payments, payment of bills, credit cards, loans, etc. But the saving aspect of banking co is most vital because it is only through this process that the finance house gets to obtain the money use in issuing loans when requested.
Saving is a very relevant financial activity as it enables people to have money anytime and anyhow; under any circumstances for future use. Saving money is a very wise choice and it is done by deducting a part of one’s disposable income and keeping it somewhere safe like the bank. In turn depending on the type of account, banking and co makes certain interest available to as a means of encouraging saving habits. These deposits in form of savings are then used for loan operations.
Tips and comments
One of the reasons for poverty is bad saving and spending culture. Although, some people may maintain a perfect saving habit, they might lack proper investing habit and when there is an imbalance, problems crops up. Not saving money means not having money for future use, but if the money is available and you don’t have a good sense of investment, problems like insolvency could arise; and when bankruptcy arise, it will cause a chain of reactions and complications like death. There are many notable personalities who have crossed to the great beyond because of financial lack. This is where the aspect of banking co really shines. For those who might not have a business idea, most financial houses run investment packages that allow customers to invest their money for profits or interests. Some even offer free financial advice especially for major clients.
So, there are many important aspect in banking co the one that stands out from them all is the part of accepting deposits or savings from their customers.