| A bank is a business which provides
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| | activities. This difference is referred
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| financial services, usually for profit. A
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| | to as the spread between the cost of
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| commercial bank accepts deposits from
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| | funds and the loan interest rate.
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| customers and in turn makes loans based
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| | Historically, profitability from lending
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| on those deposits. Traditional banking
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| | activities has been cyclic and dependent
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| services include receiving deposits of
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| | on the needs and strengths of loan
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| money, lending money and processing
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| | customers. In recent history, investors
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| transactions. Some banks (called Banks of
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| | have demanded a more stable revenue
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| issue) issue banknotes as legal tender.
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| | stream and banks have therefore placed
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| Many banks offer ancillary financial
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| | more emphasis on transaction fees,
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| services to make additional profit; for
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| | primarily loan fees but also including
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| example: selling insurance products,
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| | service charges on array of deposit
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| investment products or stock broking.
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| | activities and ancillary services
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| Currently in most jurisdictions
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| | (international banking, foreign exchange,
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| commercial banks are regulated and
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| | insurance, investments, wire transfers,
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| require permission to operate.
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| | etc.). However, lending activities still
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| Operational authority is granted by bank
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| | provide the bulk of a commercial bank's
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| regulatory authorities and provide rights
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| | income.
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| to conduct the most fundamental banking
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| | The name bank derives from the Italian
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| services such as accepting deposits and
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| | word banco, desk, used during the
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| making loans. A commercial bank is
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| | Renaissance by Florentines bankers, who
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| usually defined as an institution that
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| | used to make their transactions above a
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| both accepts deposits and makes loans;
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| | desk covered by a green tablecloth
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| there are also financial institutions
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| | Services typically offered by banks
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| that provide selected banking services
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| | Although the basic type of services
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| without meeting the legal definition of a
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| | offered by a bank depends upon the type
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| bank (see banking institutions).
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| | of bank and the country, services
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| Banks have a long history, and have
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| | provided usually include:
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| influenced economies and politics for
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| | * Taking deposits from their customers
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| centuries. In history, the primary
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| | and issuing checking and savings accounts
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| purpose of a bank was to provide
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| | to individuals and businesses
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| liquidity to trading companies. Banks
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| | * Extending loans to individuals and
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| advanced funds to allow businesses to
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| | businesses
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| purchase inventory, and collected those
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| | * Cashing cheques
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| funds back with interest when the goods
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| | * Facilitating money transactions such as
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| were sold. For centuries, the banking
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| | wire transfers and cashiers checks
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| industry only dealt with businesses, not
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| | * Issuing credit cards, ATM cards, and
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| consumers. Commercial lending today is a
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| | debit cards
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| very intense activity, with banks
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| | * Storing valuables, particularly in a
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| carefully analysing the financial
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| | safe deposit box
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| condition of its business clients to
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| | * Cashing and distributing bank rolls
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| determine the level of risk in each loan
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| | * Consumer & commercial financial
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| transaction. Banking services have
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| | advisory services
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| expanded to include services directed at
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| | * Pension & retirement planning
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| individuals and risk in these much
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| | Financial transactions can be performed
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| smaller transactions are pooled.
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| | through many different channels:
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| A bank generates a profit from the
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| | * Branch
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| differential between what level of
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| | * ATM
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| interest it pays for deposits and other
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| | * Mail
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| sources of funds, and what level of
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| | * Telephone banking
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| interest it charges in its lending
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| | * Online banking
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