Bank is an organization or a company like any other company, which sells and buys goods and services in the market. The main difference between other companies and banks is that, other companies are trading goods and services for money, but in the case of bank the trading item itself is MONEY, instead of tangible goods or intangible services. How a bank works can simply be explained as accepting deposits from customers by paying interest to their deposits, while lending this money deposited to required parties for an interest rate, which is higher than that paid to depositors. The net gain is the main source of income to banks (especially for commercial banks, because the central bank and investments banks have other ways of earning revenue). This is a classical view of a bank; however nowadays, banks are engaged in other activities as well. All the activities carried out by a bank is called banking.
The oxford dictionary defines bank as “an organization offering financial services, especially loans and safe keeping of customers money”. There must be a central bank in every country, which is authorized with monitory policy making by the government of that nation. It acts as a financial intermediary. Other than the central bank, there are several types of banks like retail banks, investment banks etc. The commercial banks mostly deal with accepting deposits and providing loan facilities. Community development banks, community banks, and postal saving banks are some examples for retail banks. Merchant banks and industrial banks are good examples for investment banks.
Banking
Banking is the business activity of a bank. Simply, any activity carried out by a bank for business purposes is called banking. Accepting savings, Lending money, leasing properties to needy people, paying for cheques, providing mortgage facilities, acting on to standing orders, statement of instructions, providing safety locker facilities for valuable things, providing over draft facilities to current account holders, acting as institutional investors in financial market, issuing ‘letter of credit’ in the business of import and export, act as money changer, issuing travelers’ cheques are some of the activities carried out by modern banks in the banking industry. Nowadays, banking can be done via the internet, which is called on line banking.
Though the words bank and banking seem to be conveying the same meaning, they have some differences between them.
What is the difference between Bank and Banking?
– Bank is a tangible object, while banking is a service.
– Bank refers to the physical resources like building, staffs, furniture, etc, while banking is the output (financial services) of the bank by utilizing those resources.
Banking refers to the services and activities that banks provide, such as deposit-taking, lending, and managing customer accounts. Banks are financial institutions that are licensed to operate by regulatory bodies, such as central banks or financial supervisory authorities.
Money Management: Both banking and finance involve the management of money. Banks manage customers' deposits and facilitate transactions, while finance broadly encompasses the management of funds, whether for individuals, corporations, or governments. Credit and Loans: Both sectors provide loans and credit services.
Banks and credit unions both offer a number of financial products, including savings accounts and certificates of deposit (CDs). The main difference between the two is that banks are typically for-profit institutions while credit unions are not-for-profit and distribute their profits among their members.
Banking refers to the system of financial institutions, such as banks and credit unions, that provide various financial services to individuals, businesses, and governments.
Banks are privately-owned institutions that, generally, accept deposits and make loans. Deposits are money people leave in an institution with the understanding that they can get it back at any time or at an agreed-upon future time.
The non-banking financial institution which comes under the category of financial institutions cannot accept deposits into savings and demand deposit accounts. A bank is a financial institution which can accept deposits into various savings and demand deposit accounts, and give out loans.
Although banks do many things, their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).
Routing Number - This is a number that can identify your bank based on the geographical location of the institution. Bigger banks may have several routing numbers while smaller ones have only one. APR - Annual Percentage Rate (APR) is the yearly interest you earn by depositing your money your money into an account.
History. The word bank comes from the Italian word banco, meaning a bench, since Italian merchants in the Renaissance made deals to borrow and lend money beside a bench. They placed the money on that bench. Elementary financial records are known from the beginning of history.
banking. The angle at which a track inclines towards the outside of a corner (or from the lower to the higher side of a straight). Also referred to as camber (see below), more commonly when modest or negative (i.e. "off-camber").
A bank is a financial institution licensed to receive deposits and make loans. There are several types of banks including retail, commercial, and investment banks. In most countries, banks are regulated by the national government or central bank.
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