The answer to the question of what a bank is will not be unambiguous. In general, it is a repository of money. But such a definition does not reveal the whole purpose of this institution. And the terminology is confusing. "Banco" is a bench for monetary operations.
General concept
The activities of such financial institutions are very diverse. They organize credit relations, money circulation, finance national economies, make purchase and sale of various securities, insurance operations, intermediary transactions, and manage property. They can be consultants, keep statistics, organize subsidiary enterprises. Most people, if asked what a bank is, will answer: an institution or an organization.
This is a common view. Indeed, one can speak of him as an association, which over time has become small, large or medium. The development of banks is very important for the market. For a long time they were state bodies. Consider what a bank is from an economic point of view. It is an enterprise that is a business (independent) entity, it has the rights of a legal entity. This organization can produce a product, implement its implementation, provide services, acting on the basic principles of cost accounting. Its activity is connected not so much with production as with the sphere of exchange. The bank must have a license - permission.
It is believed that he is a trading organization. Such associations arise because the bank, as it were, acquires resources, sells them, functioning in the field of redistribution, and exchanges goods. Such organizations have their own inventories, sellers and stores, their activities are dependent on turnover. This is where the similarity of banks with the sphere of trade ends. They do not sell goods, but a special type of product. So what is a bank? This is an organization that was created to attract funds, place them on a paid, repayable and urgent basis.
The main purpose
Banks are intermediaries in transferring funds to borrowers from lenders and to buyers from sellers. Of course, other financial institutions, such as insurance, investment funds, and brokerage firms, are engaged in similar money transfers on the market. But banks differ in two ways.
- They are characterized by a double exchange. They can place their debt obligations (certificates, certificates of deposit, deposits, etc.), and invest funds mobilized in this case in securities of other organizations. This is the difference between banks and dealers and brokers operating in the financial market.
- They also assume unconditional obligations with a certain (fixed) amount of debt to people and organizations. This happens, for example, when clients' funds are transferred to their accounts when issuing special certificates of deposit.
Some features
If we talk about such a concept as a Russian bank, then according to the rating of American agencies, it gets a low rating due to the level of stability. But financial and credit institutions in Russia have been developing and improving quite well in recent years; recently they began to show good results in risk management, which is encouraging.
Commercial banks differ from state-owned banks in that their main goal is to make a profit. In accordance with the law, they work as credit institutions, performing such operations in the financial market as:
- storage of securities, currencies, their purchase and sale;
- the provision of loans of various types, terms;
- settlements;
- work with deposits;
- issuance of guarantees and guarantees, as well as other obligations;
- trust and mediation activities.
Note an important detail: according to experts, the size of the bank is not an indicator of its financial stability! The market is pretty tough; it requires constant change.