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Bank
is a business establishment that safeguards people's money and
uses it to make loans and investments.
People keep their money in
banks rather than at home
for several reasons. Money
is safer in a bank than at home.
A current account (cheque account) with a bank provides
an easy way to pay bills.
Also, money deposited in many types of bank accounts
earns additional money for the depositor.
People who put money in a bank are actually lending it
to the bank, which may pay them interest for the use of their
funds.
Banks
are an essential part of business activity.
Companies borrow from banks to buy new equipment and
build new factories. People
who do not have enough money to pay the full price of a home,
a car, or some other product also borrow from banks.
In these ways, banks promote the sale of a wide range
of goods and services.
Banking
is nearly as old as civilization.
The ancient Romans developed an advanced banking system
to serve their vast trade network, which extended throughout
Europe, Asia, and much of Africa.
In A.D. 395, the Roman Empire split into eastern and
western sections. The
West Roman Empire fell in the late 400's, and most of its
trade and financial networks were destroyed.
Banking almost disappeared from western Europe.
However, the Justinian Code, a collection of laws
issued in the 500's in the East Roman Empire, included many
banking laws.
Modern
banking began to develop between the 1200's and the 1600's
in Italy. The
word bank comes from the Italian word banco or banca, meaning
bench. Early
Italian bankers conducted their business on benches in the
street. Large
banking firms were established in Florence, Rome, Venice, and
other Italian cities, and banking activities slowly spread
throughout Europe.
Since
the 1960's, banking has become much more international.
This is because of the increase in the number of
multinational companies and the spread of their operations
worldwide. Such
companies require the services of banks wherever they are.
Banks also provide large joint loans, with other banks,
for projects all over the world.
The world's biggest banks lend money to developing
countries. Some
countries have had difficulties in repaying their debts.
Banking has also been affected by new technology, which
has made it possible for money to be transferred from one
place, or country, to another very quickly.
Many people now use plastic cards, which give them
credit, and cash from cash dispensers.
Foreign
exchange can now be taken from one country to another much
more easily. In
some countries, companies other than banks offer many services
that previously only banks were permitted to offer.
In the United Kingdom, for example, building societies
offer current accounts that earn interest.
They also offer traveller's cheques, insurance
services, pensions services, and other investments.
Some banks have merged or been taken over.
To secure more services to offer its customers, a bank
may purchase another bank or an insurance company.
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About
Banking