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Capital investment decisions
Banking in the modern sense of the word can be traced to medieval and
The word bank was borrowed in Middle English from Middle
The earliest evidence of money-changing activity is depicted on a silver
Greek drachm coin from ancient Hellenic colony Trapezus on the Black
Museum in London. The coin shows a banker's table (trapeza) laden
Greek the word Trapeza ( ) means both a table and a bank
The definition of a bank varies from country to country. See the relevant
conducting current accounts for his customers
collecting cheques for his customers
In most common law jurisdictions there is a Bills of Exchange Act that
The business of banking is in many English common law countries not
English common law jurisdictions there are statutory definitions of
Examples of statutory definitions:
"banking business" means the business of receiving money on
"banking business" means the business of either or both of the
Since the advent of EFTPOS (Electronic Funds Transfer at Point Of
Banks act as payment agents by conductingchecking or current
Banks also enable customer payments via other payment methods such
Banks borrow most funds from households and non-financial
Banks offer many different channels to access their banking and other
ATM is a machine that dispenses cash and sometimes takes deposits
A branch is a retail location
Mail: most banks accept check deposits via mail and use mail to
Mobile banking is a method of using one's mobile phone to conduct
Telephone banking is a service which allows its customers to perform
Video banking is a term used for performing banking transactions or
A bank can generate revenue in a variety of different ways including
This difference is referred to as the spread between the cost of funds
In the past 20 years American banks have taken many measures to
Liquidity risk: risk that a given security or asset cannot be traded
Operational risk: risk arising from execution of a company's business
2. Netting and settlement of payments ± banks act as both collection
3. Credit intermediation ± banks borrow and lend back-to-back on
4. Credit quality improvement ± banks lend money to ordinary
5. Maturity transformation ± banks borrow more on demand debt and
(e.g. accepting deposits and issuing banknotes) and redemptions
Banks are susceptible to many forms of risk which have triggered
Prominent examples include the bank run that occurred during the Great
2008/2009 financial year to a record $96.4 trillion while profits declined
The United States has the most banks in the world in terms of
Currently in most jurisdictions commercial banks are regulated by
Usually the definition of the business of banking for the purposes of
Banking law is based on a contractual analysis of the relationship
1. The bank account balance is the financial position between the
2. The bank agrees to pay the customer's cheques up to the amount
3. The bank may not pay from the customer's account without a
4. The bank agrees to promptly collect the cheques deposited to the
6. The bank has a lien on cheques deposited to the customer's
7. The bank must not disclose details of transactions through the
8. The bank must not close a customer's account without reasonable
These implied contractual terms may be modified by express agreement
The requirements for the issue of a bank licence vary between
1. Minimum capital
2. Minimum capital ratio
4. Approval of the bank's business plan as being sufficiently prudent
Commercial bank: the term used for a normal bank to distinguish it
Community banks: locally operated financial institutions that empower
Community development banks: regulated banks that provide
Credit unions: not-for-profit cooperatives owned by the depositors and
Postal savings banks: savings banks associated with national postal
Private banks: banks that manage the assets of high net worth
Offshore banks: banks located in jurisdictions with low taxation and
Building societies and Landesbanks: institutions that conduct retail
Ethical banks: banks that prioritize the transparency of all operations
A Direct or Internet-Only bank is a banking operation without any
Investment banks "underwrite" (guarantee the sale of) stock and bond
Merchant banks were traditionally banks which engaged in trade
Central banks are normally government-owned and charged with
Islamic banks adhere to the concepts of Islamic law. This form of
Reserve is the primary federal regulator for Fed-member state banks;
Exchange Accommodators are regulated by MAIC
Each regulatory agency has their own set of rules and regulations to
The changing economic environment has a significant impact on banks
The management of the banks¶ asset portfolios also remains a challenge
Banks also face a host of other challenges such as aging ownership
MAIC trust & Securities Clearing services trading and become big
Passbook or ordinary deposit accounts ² permit any amount to be
NOW and Super NOW accounts ² function like checking accounts
Money market accounts ² carry a monthly limit of preauthorized
Certificate accounts ² subject to loss of some or all interest on
Notice accounts ² the equivalent of certificate accounts with an
Checking accounts ² offered by some institutions under definite
All withdrawals and deposits are completely the sole decision and
Club accounts and other savings accounts ² designed to help people
Bank statements are accounting records produced by banks under the
Expenses. This means you credit a credit account to increase its
This also means you credit your savings account every time you deposit
(or deficit) balance
One source of deposits for banks is brokers who deposit large sums of
1980s. MAIC Regulation of brokered deposits is opposed by banks on
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Published by Sonal Jain

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Published by: Sonal Jain on May 28, 2011
Copyright:Attribution Non-commercial


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