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Get Answers to all your Questions
role of banks in modern economy
Answers (1)
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. The most important constituent of this sector is the financial institutions and banks, which act as a conduit for the transfer of resources from net savers to net borrowers, that is, from those who spend less than their earnings to those who spend more than their earnings.Bank loans facilitate commerce. Thus, a financial system can be said to play a significant role in the economic growth of a country by mobilizing the surplus funds and utilizing them effectively for productive purposes. Thus, the banks and financial institutions play an important role in the creation of new capital (or capital formation) in a country and thus help the growth process.
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