Banking_Basics_mini

Banking_Basics_mini - BANKING BASICS

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BANKING BASICS
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INTRODUCTION This mini-lesson includes learning objectives, background information, discussion questions, an activity, and sources of additional information .
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OBJECTIVES Students will: Learn what a bank is What different accounts banks What checks are and how they work Learn about electronic banking Learn about bank failures
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What is a Bank? A bank is a business. Banks sell services - financial services such as car loans, home mortgage loans, business loans, checking accounts, savings accounts, certificates of deposit, and credit card services. Some people go to the bank in search of a safe place to keep their money. Others go to the bank seeking money for loans to buy houses or cars, start businesses, expand farms, or do any of the other things that require borrowing money.
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More Facts Where do banks get the money to lend? They get it from all the people who open savings and other types of accounts. Banks act as a go between the people who save and people who need to borrow. If savers didn't put their money in banks, the banks would have little or no money to lend.
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More Facts Your savings are combined with everyone else's savings to form a big pool of money. The bank uses that pool of money to make loans. The money doesn't belong to the bank's president, board of directors, or stockholders. It belongs to the depositors. That's why banks have a special obligation not to take big risks when they make loans.
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HOW DID BANKING BEGIN? No one knows who started the world's first bank, but it's safe to say that banking has it roots in the early trading civilizations of the Mediterranean ocean. Without trade there would have been little need to establish banks. Without banks there would have been less money to finance trading ventures.
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More Facts Imagine for a moment that you are a merchant in ancient Greece or Phoenicia. You make your living by selling to distant ports with boatloads of olive oil and spices. You don't grow the olive oil and spices yourself; you buy them from growers or other merchants. If all goes well, you will be paid for your cargo when you reach your destination, but before you can sail, you must have money to outfit your ship.
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More Facts You find it by seeking out people who have money sitting idle. They agree to put up the money for your cargo and supplies in exchange for a share of your profits when you return from your voyage. . if you return. The people with the idle money are among the world's first lenders and you are among the world's first borrowers. You complain that they're demanding too large a share of your profits. They reply that your voyage is perilous and they run a risk of losing their entire investment. Lenders and borrowers have carried on this debate ever since.
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More Facts Banks also use interest to attract savers. After all, people who have extra money
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Banking_Basics_mini - BANKING BASICS

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