MODULE 1 – TOPIC OVERVIEW

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WHAT IS A BANK?

 A bank is a financial institution licensed to receive

deposits and make loans.
 There are several types of banks including retail,
commercial, and investment banks.
 In most countries, banks are regulated by the national
government or central bank.

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WHAT IS BANKING?

Banking is an industry that handles cash, credit, and other financial

transactions. Banks provide a safe place to store extra cash and
credit.

They offer savings accounts, certificates of deposit, and

checking accounts. Banks use these deposits to make loans. These
loans include home mortgages, business loans, and car loans.

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The Importance of Banks

Banks play an important role in the financial system and the economy. As a key
component of the financial system, banks allocate funds from savers to
borrowers in an efficient manner. They provide specialized financial
services, which reduce the cost of obtaining information about both savings
and borrowing opportunities. These financial services help to make the overall
economy more efficient.
WHAT IS A FINANCIAL INSTITUTION?

A financial institution (FI) is a company engaged in the business of

dealing with financial and monetary transactions such as deposits,
loans, investments, and currency exchange.

Financial institutions can operate at several scales from local community

credit unions to international investment banks.

Financial institutions are classified as banking and non-bank.

Banking institutions - are institutions that receive money or deposits and
lend these money received.

Non-bank financial institutions - are institutions that receive and lend money
but are not banks.
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