Banks

Question 1

What is a bank?

Answer 1

Banks are financial institutions that act as an intermediary between borrowers and savers.

Question 2

What is a commercial bank?

Answer 2

A commercial bank is a financial institution that accepts deposits and other valuables from the public for safekeeping with the aim of making profit.

Question 3

What factors influence a consumers choice of bank?

Answer 3

Size of bank
Online facilities
Amount willing to lend
Relationship with staff
Interest rate
Location
Services provided

Question 4

What are the functions of commercial banks?

Answer 4

Acceptance of deposits
Safekeeping of valuables
Lending
Agents of payments
Issuance of bank statements
Foreign exchange transactions
Provision of financial advice

Question 5

What is a central bank?

Answer 5

A central bank is a national bank that provides financial and banking services for its country’s government and commercial banking systems, as well as implementing the monetary policy and issuing currency.

Question 6

What are the roles of central banks?

Answer 6

Acts as a lender of last resort
Acts as a banker to the government
Acts as a banker to commercial banks
Issues currency
Implements the monetary policy
Manages the nations gold and foreign currency reserves
Manages the governments debt
Acceptance of taxes paid to the government