Banks and their function Flashcards
Where does the word Bank come from
The Italian word “Banco” meaning a bench or table at which Italian money lenders used to conduct business in the middle ages.
What is the name of the oldest bank still in business?
Monte dei Paschi di Siena
Monte dei Paschi di Siena, what founded in what year?
Monte dei Paschi di Siena was founded in 1472
“A bank is a ______ _________ that uses money ________ by customers for _________, pays it out when _______, makes loans at ______, and exchanges __________.” - Oxford English Dictionary
“A bank is a FINANCIAL ESTABLISHMENT that uses money DEPOSITED by customers for INVESTMENTS, pays it out when REQUIRED, makes loans at INTEREST, and exchanges CURRENCY.” - Oxford English Dictionary
“A Bank is an ________ which accepts _____, makes _____, pays _______, and performs ______ services” - British Bankers’ Association
“A Bank is an ORGANISATION which accepts DEPOSITS, makes LOANS, pays CHEQUES, and performs RELATED services” - British Bankers’ Association
What is Banking?
The Business conducted, or the services offered by a bank.
Types of Banking activities
- Commercial Banking
- Investment Banking
- Bancassurance
Commercial Banking is essentially what?
About taking deposits and making loans.
What is a Commercial bank essentially doing when taking deposits?
It is effectively borrowing that money from the Depositor because it is based on a condition that the money can be returned to the depositor on demand.
Commercial banking Includes 3 types of banking- name them.
- Retail Banking
- Business Banking
- Wholesale Banking
What is retail banking?
Taking deposits from and lending to individuals, through a range of delivery channels, typically including a branch network.
What is Business banking?
Taking deposits from and lending to small or medium-sized business enterprises
What is Wholesale Banking?
Borrowing from and lending to large corporate clients, other financial institutions, public agencies, and governments. It involves dealing in large sums of money, which can be raised in London’s money market.
What is Investment Banking about?
- Providing advice to corporate customers who want to raise finance
- Managing corporate mergers and acquisitions
- Buying and selling shares and bonds on behalf of both corporate and private customers (typically high net worth customers), as well as for the bank.
- Managing customers’ investments and share portfolios.
What are the central activities of a commercial bank?
Involve taking deposit from and lending to individuals and companies. The bank collects money from people or companies who have surplus funds they want to deposit for safekeeping, and it lends money to those who want or are short of funds.