Investments | Mutual Funds | Real Estate | Income | Diamonds Companies | Retirement | Multinational Corporations
| Home | Site map | Contact Us |
| Home > Banks and Banking | |
Banking Origin and Development While the true origins of banking are obscured by a lack of written records, many banking functions, especially moneylending and money changing, are as old as the earliest known civilizations. Five thousand years ago Sumerian priests were accepting deposits and making loans. Over the course of history, wherever trade developed, money changing became necessary and so became the business of specialists. In Rome during the republic and early empire eras, banks accepted deposits, made loans, and transferred funds on the basis of oral contracts. It was not until the 18th century that "modern" banking that is, banking as it is known today emerged fully. Banking Origin and Development History of U.S. Banking Banking in the United States began in the 18-th century, when individuals, merchants, and colonial governments loaned money to one another. In 1791 Congress established the First Bank of the United States with a 20-year charter. In 1816 Congress created the Second Bank of the United States. Under the aggressive direction of Nicholas Biddle. The total number of banks increased from 2, 000 in 1866 to 13,000 in 1900, and to 27,000 in 1913. The typical new bank was state chartered. It was located in a small rural community and supplied credit to farmers. National banks grew more in size than in number. The largest of these banks, located in financial centers, supplied credit to an expanding industrial empire centered on railroads. History of U.S. Banking Bank of the United States A banking corporation chartered by the federal government to serve as a central bank. The bank existed in two stages, known as the First Bank (1791 1811) and the Second Bank (1816 1836). Although the bank rendered important services to the economy, it became in its later years the focal point of a bitter political struggle that resulted in its eventual overthrow by President Andrew Jackson. Read Hamilton's proposal, and also about first and second banks. Banking Services Banks are business organizations that accept and hold deposits from the public, transfer funds on order from their depositors, and use these funds to make loans or purchase securities. The term "bank" once described only commercial banks, but now savings banks, savings and loan associations, and credit unions provide nearly the same services. These institutions differ in some respects, however. Banking Services include: deposit services, credit services, credit cards services, internet banking and others. Read Banking Services Investment Banking Investment banking is the provision of services to businesses and governments in obtaining money, usually through the sale of marketable securities. Investment banking is as old as the corporate form of business. When profit-seeking companies need capital, they turn to agents, who obtain it for them from savers. Traditionally, those savers were individuals, but they are now more likely to be financial institutions, such as insurance companies, private or government pension funds, or mutual funds. Investment bankers have also created new securities to help their client better manage investment risks and returns.
Real Estate Financing Debt created to finance real estate purchases represents the largest component of outstanding debt in U.S. capital markets. Of the total debt outstanding in all domestic nonfinancial sectors at the beginning of 2000, real-estate mortgage debt accounted for more than 45%. Thus real estate finance clearly ranks among the most important economic activities in the United States. Also - Mortgage markets may be categorized as primary or secondary markets. The primary market includes the originators and holders of mortgages. The secondary market, which is dominated by government or government-sponsored agencies, consist of institutions that purchase existing mortgages and repackage or otherwise reconfigure them for resale. Main institutions operate in both markets. And some words about role of government in Real Estate Financing. Payment Services One of the most important functions of banks is to provide the means of making payments within the economy. Most small payments are made with currency, but on a volume basis, most payments are made by transferring a deposit in a financial institution from one party to another. A bank check is simply an instruction to the bank by its customer to transfer funds from the customer's (payer's) account to that of a third party (the payee). If the payment system is efficient, those orders will be implemented swiftly, cheaply, and with certainty. About 70 billion checks are written annually in the United States, requiring a massive system for collecting and clearing checks. Operating this system is a substantial task for banks. More about Payment Services Trust Services Fewer than 50 trust companies operating in the United States concentrate exclusively on trust and agency activities. All other "trust companies" are either commercial banks - national banks or state-chartered commercial banks-that have been authorized to operate trust departments, or state-chartered trust companies that have been authorized to engage in commercial (and savings) banking. Although almost all statechartered trust companies have commercial banking departments, a large majority of the nation's commercial banks, especially those in smaller cities and towns, do not have trust departments. Trust Services Commercial Banks Commercial banks, which exist in every country, are the oldest and most important financial institutions in the world. They originated in the Middle Ages to collect savings from individuals and put them to use to finance commerce. Commercial banks are financial intermediaries that channel funds from savers to borrowers in ways that are more attractive than those available to savers and borrowers who deal with each other directly. Banks thus increase the total amount of funds saved and invested.
Commercial Banks Federal Reserve Systems The U. S. Federal Reserve System began operations in 1914 as the nation's central bank. Through its influence on money and credit, it has become a major instrument of national economic policy. It plays a large role in the regulation of financial institutions and in international financial relations. The Federal Reserve System is composed of the Board of Governors with headquarters in Washington, D.C., the 12 regional Federal Reserve banks, located in major cities throughout the United States (Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, San Francisco). Federal Reserve Systems Banking GlossaryBanking Services | Trust Services | Investment Banking | Payment Services | Real Estate Financing | Banking Origin and Development |
|
© 2007 – 2008 Investments & Income