The history of banking began around 1870, according to most historians. People have traditionally used banks as a way to safeguard those things most important to them. Not only were banks used to save deposits and withdraw money, they were also used for
The history of banking began around 1870, according to most historians. People have traditionally used banks as a way to safeguard those things most important to them. Not only were banks used to save deposits and withdraw money, they were also used for loans, document safety deposits, and financial consulting. Today there are a variety of banks that serve different purposes. In order to understand the main objective of a commercial bank, it is important to know what a commercial bank is. Unlike a traditional bank, a commercial bank is a financial institution that provides services primarily from one business to another. Commercial bank activities are different than investment or traditional banks in that commercial banks act as intermediaries between an issuer of security and the investing public, facilitating mergers and other corporate reorganization, acting as a broker for institutional clients, and underwriting for commercial acquisition. The main objective of a commercial bank is to maintain making money, and they do so in a variety of ways. One way is to keep money moving, from person to person, business to business. Some banking institutions associated with credit unions, schools or other entities may not make their primary objective clear. However, commercial banks clearly articulate their main objective as profitability. A commercial bank having lucrative assets positively affects the community it’s in, as well as having far reaching positive outcomes. As businesses thrive and grow, more people are employed, more money is spent in the marketplace, and the cycle of generating money repeats to keep the economy afloat.
The main objective of commercial banks is to maintain higher profitability by maintaining circular and efficient flow of amount of money deposited by the customers and the lenders. Commercial banks contribute to the economic cycle by keeping the money circulation among households, government and corporate businesses. The commercial banks lend money to the economic agents through their various products and services by earning interest income on the borrowed money. Commercial banks design their short term and long term loans and other products to cater to the need of customers while enhancing their own returns. Their objective is to attract more customers and build profitable relationships with the new and existing customers.
The main objective of a commercial bank is to provide high standard facilities for transfer of funds, financing the business operations and purchase of households, security and adequate return on savings and earns income from these activities to provide optimum return to its shareholders.
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