![]() ![]() ![]() Roles of the Financial System The primary purpose of the financial system is to encourage saving and to transfer those savings from savers and lenders to borrowers and spenders. ![]() ![]() The Legal Basis for Banking A bank is any business offering deposits subject to withdrawal on demand and making loans of a commercial or business nature Congress then defined a bank as any institution that could qualify for deposit insurance administered by the Federal Deposit Insurance Corporation (FDIC) Under federal law in the U.S., a bank is not defined so much by its many products, but by the government agency insuring its depositsĨ The Financial System and Competing Financial-Service Institutions Community Banks Money-center banks Cover whole regions, nations, and continents Offer the widest possible menu of financial services Acquire smaller businesses Face tough global competition Community banks Much smaller Service local communities and towns Offer less financial services Historically, banks have been recognized for the many different financial services they offer, such as: Investment Banking Insurance Financial planning Advice for merging companies Risk-management services to businesses and consumers ……And many other servicesĥ EXHIBIT 1-1 The Many Different Kinds of Financial-Service Firms Calling Themselves Banks The economic functions it performs The services it offers its customers The legal basis for why it exists. banks represent about one- fifth of the total assets In other nations banks hold half or more of all assets in the financial systemĤ What Is a Bank? A bank can be defined in terms of: Key Topics Powerful Forces Changing the Industry What Is a Bank? The Financial System and Competing Financial-Service Institutions Old and New Services Offered to the Public Key Trends Affecting All Financial- Service Firmsģ Introduction Banks are the main source of credit (loans) for millions of households and for many units of government World-wide banks grant more loans to consumers (households) than any other financial-service companies The assets held by U.S. 1 An Overview of the Changing Financial-Services SectorĬhapter One An Overview of the Changing Financial-Services SectorĢ Powerful Forces Changing the Industry What Is a Bank? ![]()
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