CHAPTER TWO: LITERATURE REVIEW.
II 1 BANKING TOWARDS THE DEFINITION
II
1 1 DEFINITION
A bank is a financial institution licensed by a government. Its
primary activities include borrowing and lending money. For example Banks are
important players in financial markets and offer financial services such as
investment funds. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such as
the United States, Banks are prohibited from owning non-financial companies.
The level of government regulation of the banking industry varies widely, with
countries such as Iceland, the United Kingdom and the United States having
relatively heavier regulation of the banking sector, and countries such as
China having relatively heavier regulation (including strict regulations
regarding the level of reserves)(www.wikipedia/bank).
II
1 2 ORIGIN OF THE WORD «BANK»
The name bank derives from the Italian word banco
»desk/bench», used during the renaissance by Florentine bankers, who
used to make their transactions above a desk covered by a green tablecloth.
However, they are traces of banking activity even in ancient times. In fact,
the word traces its origins back to the Ancient Roman Empire where moneylenders
would set up their stalls in the middle of enclosed courtyards called macella
on a long bench a bancu, from which the words banco and bank are derived. As a
moneychanger, the merchant at the» banca» did not so much invest
money as merely convert the foreign currency into the only legal tender in Rome
(www.wikipedia/bank)..
II
1 3 TRADITIONAL BANKING ACTIVITIES
Banks act as payment agents by conducting checking or current
accounts for customers, paying cheques drawn by customers on the bank, and
collecting cheques deposited to customer's current accounts. Banks also enable
customer payments via other payment methods such as telegraphic transfer,
EFTPOS (Electronic Funds Transfer Through Point of Sale) and ATM (Automatic
teller Machine).
Banks borrow money by accepting funds deposited on current
accounts, by accepting term deposits, and by issuing debt securities such as
bank notes and bonds. Banks lend money by making advances to customers on
current accounts, by making installment loans, and by investing in marketable
debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is
considered indispensable by most businesses, individuals and governments
(www.wikipedia/bank).
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