A bank is a financial institution that accepts deposits from the public and creates a demand deposit while making loans. The lending activity can be carried out directly or indirectly by the bank or through the capital markets. The banking sector is a hub of the financial system. Banking is the pillar of the economy and integrates into our daily life. It is hard to imagine a world without banks.
Our daily life and our businesses depend heavily on banks. Our bank accounts come into use when our employer pays us through direct deposit, ATM transactions, credit card payments, mortgage, and car payments, and much more.
The question is, Whether life is possible without Banks or not? To understand this first, we need to know all the problems faced when the banks did not exist and why it is essential to have banks nowadays.
Before, people faced difficulties in the money circulation process. There was no safe place to deposit money. Acquiring loans was not possible before the banks ultimately made industries less functional.
WHY DO WE NEED BANKS?
- To accelerate the rate of Capital Formation
- Provision of finance and credit
- Financing Employment Generating Activities
- Promote Industrial and Agricultural Development
- Fulfillment of Socio-Economic Objectives
IMAGINING A WORLD WITHOUT BANKS:
It happened 100’s of years ago. It won’t be easy right now. Without banks, the economy will not grow at a higher rate it is rising right now. Businesses will find it hard to survive without a sufficient cash influx. People might find it hard to hold on to cash in their hands. There will be government-related problems. Ultimately. leakage would occur.
It will hurt the economy of the world. Financial policy and banks depend on each other. Financial Policies and banks should implement regulations to help customers and banks.
Do not pursue the idea of “Life Without Banks” for the greater good.
