Why are banks necessary for a country?

The banking system plays an important role in the modern economic world. Banks collect the savings of the individuals and lend them out to business- people and manufacturers. Thus, the banks play an important role in the creation of new capital (or capital formation) in a country and thus help the growth process.

Why was banks created?

Key Takeaways. Banking institutions were created out of a need to satisfy the market to provide loans to the public. As economies grew banks allowed the general public to increase their credit and make larger purchases.

 

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