Essay on Banking
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A bank refers to a financial institution that accepts deposits and channels the money into lending activities (Lewis, 2009). Ethics refers to the principles of right and wrong that are accepted by an individual or a social group ((Lewis, 2009).) Conceptually, ethics refers to well base standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues (Safakli, 2005). It’s the integrity measure, which evaluates the values, norms and rules that constitute the base for individual and social relationships, from a moral perspective (Smith and Smith, 2002). It consists of choosing the good over the bad, the right over the wrong and the…show more content…
The banking sector in the modern society, in many areas, play many roles which includes unifying and intermediary roles between the fund supplying and fund demanding sides of the society, helping accomplish investment and saving functions. Banking institutions are expected to protect the rights and interests of depositors, establish stable and trustworthy financial markets, engage in economic development and more importantly to ethically conduct their operations in compliance with the principles of integrity, transparency , reliability, impartially, with social responsibility and control money laundering (Carse, 1999). However, not all banking institutions practice these norms, with their dishonor leading to adverse effects, for instance; corruption which includes the banking sector unethical conduct, can cost the poor three times more than the rich, according to a 2002 Word Development Report.
Financial institutions -including banks of all sorts, credit agencies, private equity firms, pension funds, insurance companies, and the like- have long been considered by most people to have no other object in view than the creation of wealth. The performance of financial institutions is therefore measured solely on the basis of their capacity to maximize financial assets, that is, it has been measured with evaluation factors that review only their monetary bottom-line results.
A bank is a financial institution where customers can save or borrowmoney. Banks also invest money to build up their reserve of money. What they do is regulated by laws. Those laws differ in different countries. The people who work at a bank are called bank employees. Certain banks deal directly with the public and they are the only ones which an ordinary person will deal with. Other banks deal with investments and international currencytrading.
Customers' money may be placed in the bank for safe keeping. Banks may give loans to customers under an agreement to pay the bank back at a later time, with interest. An example is getting a mortgage to buy a house or apartment. Banks also can use the money they have from deposit accounts to invest in businesses in order to make more money.
In most countries the rules for banks are made by the government acting through laws. A central bank (such as the Bank of England) adjusts how much money is issued at a particular time. This is a factor in the economy of a country, and the government takes the big decisions. These "banks of issue" take in, and issue out, coins and banknotes.
History[change | change source]
The word bank comes from an Italian word banco, meaning a bench, since Italian merchants in the Renaissance made deals to borrow and lend money beside a bench. They placed the money on that bench.
Elementary financial records are known from the beginning of history. Baked clay records were done before the invention of writing.
In the 17th century, merchants started storing their gold with goldsmiths in London. The goldsmiths had their own vaults, and charged a fee for storing the merchants' gold. The goldsmiths eventually started loaning money using the gold left to them, and also paid interest on the gold.
The Bank of England began issuing banknotes in 1695. The oldest bank still in existence is Monte dei Paschi di Siena in Siena, Italy, which started in 1472.
Banking activities[change | change source]
A bank usually provides the following services:
Types of banks[change | change source]
- Community development bank: regulated banks that provide financial services and credit to under-served markets or populations.
- Land development bank: The special banks providing long term loans are called land development banks, in the short, LDB. The history of LDB is quite old. The first LDB was started at Jhang in Punjab in 1920. The main objective of the LDBs are to promote the development of land, agriculture and increase the agricultural production. The LDBs provide long-term finance to members directly through their branches.
- Credit union or Co-operative bank: not-for-profit cooperatives owned by the depositors and often offering rates more favorable than for-profit banks. Typically, membership is restricted to employees of a particular company, residents of a defined area, members of a certain union or religious organizations, and their immediate families.
- Postal savings: savings banks associated with national postal systems.
- Offshore bank: banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.
- Savings bank: focuses on accepting savings deposits and paying interest on deposists.
- Building society and Landesbanks: institutions that conduct retail banking.
- A Direct or internet-only bank is a banking operation without any physical bank branches, conceived and implemented wholly with networked computers.
References[change | change source]
- ↑Mesopotamia of 8000 BC.
- ↑Davies G. & Bank J.H. 2002. A history of money: from ancient times to the present day. University of Wales Press.