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Banking

Banking  in general terms, the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn a profit. Personalized financial and banking services that are traditionally offered to a bank’s rich, high net worth individuals (HNWIs). For wealth management purposes, HNWIs have accrued far more wealth than the average person, and therefore have the means to access a larger variety of conventional and alternative investments. Private banks aim to match such individuals with the most appropriate options. A specific division of banking related to the creation of capital for other companies. Investment banks underwrite new debt and equity securities for all types of corporations. Investment banks also provide guidance to issuers regarding the issue and placement of stock.

bankingBanking is one of the key drivers of the U.S. economy. Why? It provides the liquidity needed for families and businesses to invest for the future. Bank loans and credit means families don’t have to save up before going to college or buying a house, and companies can start hiring immediately to build for future demand and expansion. Credit has gotten a bad name, thanks to the 2008 financial crisis, but that’s only because it was unregulated, used for consumption instead of investment, and allowed to create a bubble. Banks may be classified into four chief types, namely, commercial, savings, trust, and investment. The deposits of commercial banks are received largely from individuals, firms and corporations in all lines of business, are repayable on demand, and are mostly invested in short time loans for commercial business purposes, these loans having a maturity of perhaps three to six months, and enabling the bank to keep its assets comparatively liquid and its loans constantly maturing. Savings banks, which are designed to promote thrift, receive unused, small sums from the general public, which are left with the banks for future need. These deposits may be repaid on demand, but since interest is usually paid on deposits, and the bank’s investments are made for a long period of time to enable it to earn a higher interest rate, the banks are generally allowed to demand advance notice of anywhere from ten to ninety days of any substantial sums to be withdrawn. This notice of withdrawal may be waived by the bank if it so desires. The bank may also further protect itself against large withdrawals by limiting the amount which it will receive on deposit from any one person. The chief investments of savings banks are approved bonds and first mortgages on real estate, both probably of long maturity. The deposits classified as trust funds are received from individuals, firms and corporations assigning funds for some trust function, and are repayable and invested according to law and the conditions of the trust. Investment banks receive their deposits from well-to-do people who wish their funds held for investment and which are in due course converted into bonds, acceptances and other so-called investment securities. A particular bank may perform functions of more than one type of banking as the recent tendency in banking is towards an ever greater scope of business, partly caused by competition and partly by the natural desire of a bank to handle all of the business of its customers which it readily can.