3.1.2 Banking Flashcards
1
Q
What is meant by the term ‘bank’
A
- A bank is a financial institution licensed to receive deposits and make loans
2
Q
What are the three types of banks
A
- Commercial banks (e.g. Lloyds)
- Investment banks (e.g. JP Morgan chase)
- Central banks (e.g. Bank of England)
3
Q
What are the three key functions of commercial banks
A
- Take in deposits
- Lend money
- Facilitate money transmission
4
Q
How will interest be charged
A
- your credit risk
- the level of competition between banks
- central bank interest rate
5
Q
Importance of commercial banks
A
- secure place to store money
- providing loans to buy goods and services
- providing loans for businesses to grow
- facilitating trade nationally and internationally (mostly online)
-financial advice
