Information
The following information was summarised from various sources for your convenience.
A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. Banking Standard activities
Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to. Wider commercial role The commercial role of banks is not limited to banking, and includes:
Channels Banks offer many different channels to access their banking and other services:
Business model A bank can generate revenue in a variety of different ways including interest, transaction fees and financial advice. Merging banking, investment, and insurance functions allows traditional banks to respond to increasing consumer demands for "one-stop shopping" by enabling cross-selling of products (which, the banks hope, will also increase profitability). Some of the main risks faced by banks include:
The capital requirement is a bank regulation, which sets a framework on how banks and depository institutions must handle their capital. Banks in the economy
Bank crisis Banks are susceptible to many forms of risk which have triggered occasional systemic crises. These include liquidity risk (where many depositors may request withdrawals beyond available funds), credit risk (the chance that those who owe money to the bank will not repay it), and interest rate risk (the possibility that the bank will become unprofitable, if rising interest rates force it to pay relatively more on its deposits than it receives on its loans). In the UK, for example, the Financial Services Authority licences banks, and some commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to those issued by the Bank of England, the UK government's central bank. Banking law is based on a contractual analysis of the relationship between the bank (defined above) and the customerdefined as any entity for which the bank agrees to conduct an account. The requirements for the issue of a bank licence vary between jurisdictions but typically include:
Types of banks Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; Types of retail banks
In the United States, the banking industry is a highly regulated industry with detailed and focused regulators. Accounting for bank accounts
Bank statements are accounting records produced by banks under the various accounting standards of the world. Banks which failed during 2008 and 2009 in the United States during the global financial crisis had, on average, four times more brokered deposits as a percent of their deposits than the average bank.
Types of bank Central bank Advising bank Commercial bank Community development bank Credit union Custodian bank Depository bank German public bank Investment bank Industrial bank Islamic banking Merchant bank Mutual bank Mutual savings bank National bank Offshore bank Private bank Savings bank Swiss bank
Deposit accounts Savings account Transactional account Money market account Time deposit
Electronic funds transfer Automated Clearing House Electronic bill payment Giro Wire transfer
Banking terms Anonymous banking Automatic teller machine Loan Money creation Substitute check
List of banks Banks and credit unions in Canada Banks in Hong Kong Banks in Singapore Banks in Pakistan
Finance series Financial market Financial market participants Corporate finance Personal finance Public finance Banks and Banking Financial regulation
issue of banknotes (promissory notes issued by a banker and payable to bearer on demand)
processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means
providing documentary and standby letters of credit (trade finance), guarantees, performance bonds, securities underwriting commitments and other forms of off-balance sheet exposures
acting as a 'financial supermarket' for the sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products
ATM is a machine that dispenses cash and sometimes takes deposits without the need for a human bank teller. over the Internet
Mobile banking is a method of using one's mobile phone to conduct banking transactions
Video banking is a term used for performing banking transactions or professional banking consultations via a remote video and audio connection. Video banking can be performed via purpose built banking transaction machines (similar to an Automated teller machine), or via a videoconference enabled bank branch.
Commercial bank: the term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses. These big banks are very diversified groups that, among other services, also distribute insurance hence the term bancassurance, a portmanteau word combining "banque or bank" and "assurance", signifying that both banking and insurance are provided by the same corporate entity. (September 2008)
Look up bankor banking in Wiktionary, the free dictionary. 9 November 2004, ISBN 88-87822-16-6 (the book can be downloaded at www.giuseppefelloni.it)