Ch1 - Chapter 1 An Overview of Banks and Their Services...

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Chapter 1 An Overview of Banks and Their Services What is a Bank  The Services Banks Offer the Public  Trends Affecting All Banks 
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What is a Bank What is a Bank: - A financial intermediary accepting deposits and offering loans. - Offers the widest range of services of any financial institution and  performs the widest range of financial functions of any business firm  in the economy.  - Principal source of credit (loanable funds) for millions of individuals,  families, government and businesses.
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What is a Bank Banks’ Competitors : - Insurance Companies - Pension Plans - Mutual Funds - Real Estate Developers - Mortgage Companies  - Check Cashing Firms - Small Loan Vendors - Finance Companies - Security Brokers and Dealers - Credit Unions and Thrift Companies   Trying to be  as similar to  banks in the  services  they offer.
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What is a Bank Nonbank Banks : - Depository institutions offering checking accounts or commercial  loans but not both. - The trend of many institutions effort to offer bank-like services  occurred in 1980s, e.g. Merrill Lynch, Prudential Insurance.
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The Modern Bank The  Modern  Bank The  Payment  Function The thrift  (savings)  function The  insurance  function The investment or  financial planning  function The Credit  Function The  investment  banking  function The real estate and  community  development  function The cash  management  Function The  merchant  banking  function The security  brokerage  function
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The Services Banks Offer the Public Services Banks Have Offered Throughout History 1. Carrying Out Currency Exchange - One of the first services offered by banks. - They traded one form of currency for, such as dollars, for another,  such as francs or pesos, in return for a service fee. - This service has always been very important to the travelers. - In today’s financial marketplace, trading in foreign currency is  carried out primarily by the largest banks due to risks involved and  expertise required.
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The Services Banks Offer the Public Services Banks Have Offered Throughout History 2. Discounting Commercial Notes - Early in their history, bankers began discounting commercial  notes, in effect making loans to local merchants who sold  accounts receivables to banks to raise cash quickly. - It was a short step from discounting commercial notes to making  direct loans to businesses for purchasing goods or for  constructing new facilities.
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Services Banks Have Offered Throughout History 1. Offering Savings Deposit - Savings Deposits are interest bearing funds left with banks for a  period of time sometimes bearing relatively high rates of interest. -
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Ch1 - Chapter 1 An Overview of Banks and Their Services...

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