General introduction about banking in the field of business (What is the nature of a banking business?)
Banking refers to the general business activities that involve accepting/receiving and safeguarding money that belongs to individuals and entities. Banking also entails lending of money that is under watch (belonging to individuals and entities) with the aim of enhancing levels of profits and revenues (Hammonds, 2007). One of the critical features of banking is the essence of banks. A bank refers to the financial institution that deals with deposits and advances including other related services. The facility performs the function of receiving money from individuals and entities with the motivation of saving in the manner of deposits. The bank then executes the act of lending the money received from individuals with the need to save to persons and business entities in demand of the amount. The nature of the banking system involves connection of the savers and borrowers in the process of making profits by the financial institutions.
Types of banks
There are unique types of banks that perform different functions. These functions aim towards meeting the needs and demands of the borrowers and servers within the market structure and industry. The first type of banks is retail banks. The aim of these banks is to offer accurate and effective services to individual consumers. Examples of the retail banks within the banking sector include savings bank, recurring and fixed deposit banks, saving and loan association banks. Products of the retail banks include savings accounting, deposit certificates, consumer and vehicle loans, mortgages, and boxes that facilitate the process of depositing within the context of the financial institutions (Hammonds, 2007). The type of bank is a commercial bank. Commercial banks offer financial and economic services to the business entities. These services supplement the credit and debit cards, accounts, loans (secured and unsecured), and deposits. Commercial banks like other relevant banking systems raise money from depositors and lend the amount generated to borrowers with the aim of making profits.
The third groups of banks are investment banks. Investment banks facilitate efforts by consumers, business entities, and relevant authorities towards accumulation of capital. This is executed through acting as the agent for the government, corporations, and individual consumers in the issuance of the securities. Investment banks also enable organizations to achieve the process of merger and acquisition. Investment banks also provide economic and financial advice to their clients in relation to effective and efficient market opportunities. The other groups of banks are cooperative banks (Hammonds, 2007). Cooperative banks are under the jurisdiction of the government by obliging to the demands of the state cooperative societies act. The main aim of cooperative banks is to offers cheap credit facilities to their clients and members. The other type of bank is specialized bank. Specialized banks refer to foreign exchange financial institutions, development banks, and industrial banks that offer financial assistance to industries, foreign trade, and massive expansion projects. The other banking system of type of bank is the central bank. The …