Definition
Bank is a financial institution that accepts deposits, provides loans, and offers other services such as payment processing, wealth management, and currency exchange. Banks act as intermediaries, channeling funds from savers to borrowers to support economic activity.
Why It Matters
Banks are essential for economic stability and growth. They facilitate lending, investment, and payments, while managing risks and safeguarding deposits. Well-functioning banks enable businesses to expand, consumers to borrow, and governments to fund public projects.
Example
A commercial bank accepts deposits from customers, uses a portion of those deposits to provide loans to small businesses, and invests in short-term government securities. This process supports local commerce while maintaining liquidity and safety for depositors.