What is a bank in modern life?

The answer to the question of what a bank is, will not be unambiguous. In general, it is a depository of money. But such a definition does not disclose the whole purpose of this institution. A terminological formulation is capable of confusing. "Banco" is a bench for performing monetary operations.

General concept

The activities of such financial institutions are very diverse. They organize credit relations, turnover of money, finance national economies, buy and sell different securities, insurance operations, intermediary transactions, manage property. They can be consultants, conduct statistics, and organize subsidiary enterprises. Most people, if asked what a bank is, they will answer: an institution or an organization.

This is a common view. Indeed, we can talk about it as a union, which eventually became small, large or medium. The development of banks is very important for the market. For a long time they were organs of the state. Consider what a bank is in terms of the economy. It is an enterprise that is an economic (independent) entity, it has the rights of a legal entity. This organization can produce a product, implement it, provide services, acting on the basic principles of self-financing. Its activities are connected not so much with production as with the sphere of exchange. The bank must have a license-permit.

There is an opinion that he is a trading organization. Such associations arise because the bank, as it were, acquires resources, sells them, operates in the field of redistribution, exchanges goods. Such organizations have their own commodity stocks, sellers and storehouses, their activities are dependent on turnover. This concludes the similarity of banks with the sphere of trade. They do not sell goods, but a special kind of products. So, what is a bank? This is an organization that is created to raise funds, place them on terms of pay, repayment and urgency.

The main purpose

Banks are intermediaries in the transfer of funds to borrowers from creditors and to buyers from sellers. Of course, in the market such a transfer of money involved in other financial institutions: insurance, investment funds, brokerage firms. But banks differ in two features.

1. They are characterized by a double exchange. They can place their promissory notes (certificates, deposit certificates, deposits, etc.), and raised funds to invest in securities of other organizations. In this, banks differ from dealers and brokers operating in the financial market.
2. They also assume unconditional obligations with a certain (fixed) amount of debt to people and organizations. This happens, for example, when the clients' funds are transferred to their accounts, when issuing special deposit certificates.

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 because of the level of stability. But financial and credit institutions in Russia have been developing and improving quite well in recent years, they have recently shown good results in risk management, which is encouraging.

Commercial banks differ from state ones in that their main goal is to make a profit. In accordance with the legislation, they work as credit institutions, performing such operations in the financial market as:

• Storage of securities, currencies, their purchase and sale;
• Provision of loans, different in types, terms;
• Making settlements;
• Work with deposits;
• Issuance of guarantees and guarantees, as well as other obligations;
• Confidential and intermediary activities.

We 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 changes.