Eco. 324 —9-4-2021 (Online Discussion Quiz 2—Commercial Banks and the Economy)

NAME: MGBADA OGOCHUKWU EMELDA
REG NO:2017/245040
DEPARTMENT: ECONOMICS
THE ROLE OF COMMERCIAL BANK
The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is where most people do their banking. Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.
• Accept deposits
• Lend money
• Process payments
• Issue bank drafts and checks
• Offer safety deposit boxes for items and documents
There are more actions, of course, and finer categories within this broad view. Commercial banks may offer other services such as brokering insurance contracts, giving investment advice and so on. They also provide a wide variety of loans and offer other credit vehicles like cards and overdrafts. However, the common theme among these activities is that they are aimed at providing a financial service to an individual or business.
Advantages of Commercial Banks
Following are the important advantages of financial assistance provided by commercial banks:
1. The deposited amount with the banks is used for the overall development of the country through the financial assistance provided by the banks.
2. Socialism was established in the country with the help of the banks and their nationalization.
3. Banks help the unorganized and weaker sections. As a result, the loan requirements of small and marginal farmers, artisans, small entrepreneurs, and weaker sections have started getting fulfilled.
4. The commercial banks have provided financial assistance to the unemployed persons in starting their venture.
5. By the establishment of regional banks in the rural areas, farmers are coming out of the grip of moneylenders and rural indebtedness has started declining.
6. The commercial banks are encouraging the development of small and cottage industrial also and loan facilities are being provided to the entrepreneurs.
7. The economic position of the common man has been rapidly improving due to the significant role of commercial banks in the process of national development. As a result, their living standard is going high.
8. The entrepreneurs can obtain the loan on easy terms, without many formalities.
9. Banks maintain the secrecy of all information about their customers.
10. The bank is a real friend at the time of need because the bank helps the entrepreneurs during the crisis through overdraft facilities and credit facilities.

Disadvantages of Commercial Banks
The entrepreneurs and institutions may have the following disadvantages also, from the commercial banks:
1. The efficiency of the banks is fast reducing.
2. Customer services are also fast deteriorating. As a result, the customers are getting dissatisfaction also
3. The branch managers have become weak and helpless due to fast expansion and the majority of local staff. All these adversely affect management and control.

NAME: MGBADA OGOCHUKWU EMELDA
REG NO:2017/245040
DEPARTMENT: ECONOMICS
COMMERCIAL BANK
A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit.
It can also refer to a bank, or a division of a large bank, which deals with corporations or large/middle-sized business to differentiate it from a retail bank and an investment bank. Commercial banks include private sectorbanks and public sector banks.
The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is where most people do their banking. Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.
• Accept deposits
• Lend money
• Process payments
• Issue bank drafts and checks
• Offer safety deposit boxes for items and documents
There are more actions, of course, and finer categories within this broad view. Commercial banks may offer other services such as brokering insurance contracts, giving investment advice and so on. They also provide a wide variety of loans and offer other credit vehicles like cards and overdrafts. However, the common theme among these activities is that they are aimed at providing a financial service to an individual or business.
Advantages of Commercial Banks
Following are the important advantages of financial assistance provided by commercial banks:
1. The deposited amount with the banks is used for the overall development of the country through the financial assistance provided by the banks.
2. Socialism was established in the country with the help of the banks and their nationalization.
3. Banks help the unorganized and weaker sections. As a result, the loan requirements of small and marginal farmers, artisans, small entrepreneurs, and weaker sections have started getting fulfilled.
4. The commercial banks have provided financial assistance to the unemployed persons in starting their venture.
5. By the establishment of regional banks in the rural areas, farmers are coming out of the grip of moneylenders and rural indebtedness has started declining.
6. The commercial banks are encouraging the development of small and cottage industrial also and loan facilities are being provided to the entrepreneurs.
7. The economic position of the common man has been rapidly improving due to the significant role of commercial banks in the process of national development. As a result, their living standard is going high.
8. The entrepreneurs can obtain the loan on easy terms, without many formalities.
9. Banks maintain the secrecy of all information about their customers.
10. The bank is a real friend at the time of need because the bank helps the entrepreneurs during the crisis through overdraft facilities and credit facilities.

Disadvantages of Commercial Banks
The entrepreneurs and institutions may have the following disadvantages also, from the commercial banks:
1. The efficiency of the banks is fast reducing.
2. Customer services are also fast deteriorating. As a result, the customers are getting dissatisfaction also
3. The branch managers have become weak and helpless due to fast expansion and the majority of local staff. All these adversely affect management and control.

Name: Ijara Peter Elochukwu
Department: Economics
Reg no: 2017/249513
Email: petochris86@yahoo.com

Commercial banks are very important in any society serious about development. Commercial banks are indispensable and contribute in no small measure to the growth of an economy. Commercial perform the role of fund mobilization. Commercial banks are commonly called banks and are institutions that collect small and large deposits from the public, give short and medium term loans, transactional functions on behalf of customers etc.
Commercial banks are the channel through which government implement their monetary policies. The establishment of commercial banks in rural areas encourages savings . This savings are then use as credit that is multiplied through productive activity and interest paid on loans taken.
Commercial banks provide travellers cheques and promote international trade which is very important for economic development.
Furthermore, the advent of ATMs and mobile transfer has made trade easier thereby sustain the economy. They provide funds for modern technology and international trade that pumps blood to the heart of the economy.
In conclusion the vital role commercial banks play can’t be over emphasized and a grossly inefficient commercial banking system is a deep cut to the economy that if it persists for long will be it’s death.

Name: Edochie Praise Ifeoma
Department: Economics major
Reg no: 2017/249492
Email: Edochie80@gmail.com

Imagine a world without commercial banks… it will definitely be a harder one. Commercial banks are indispensable and contribute in no small measure to the growth of an economy. Commercial perform the role of mobilizing funds to people who need it for production.
Commercial banks are common called banks and are institutions that collect small and large deposits from the public, give short to medium term loans, transactionary functions on behalf of customers etc.

Commercial banks are the channel through which government implement their monetary policies. The establishment of commercial banks in rural areas encourage savings . This savings be use as credit that is multiplied through productive activity and interest paid on loans taken.
Commercial banks promote international trade which is very important for economic growth. They provide travellers cheques.
Furthermore, the advent of ATMs and mobile transfer has made trade easier thereby sustain the economy. They provide funds for modern technology and international trade that pumps blood to the heart of the economy.

In conclusion the importance of commercial banks can’t be over emphasized and a grossly inefficient commercial banking system is a deep cut to the economy that if it persists for long will be it’s death.

Name: Oroke Charity Nnedimma
Reg:2017/243816
Department: Economics
Course code: Eco 324
Commercial bank
A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit
It can also refer to a bank, or a division of a large bank, which deals with corporations or large/middle-sized business to differentiate it from a retail bank and an investment bank. Commercial banks include private sector banks and public sector banks. Commercial banks:
Accept deposits
Lend money
Process payments
Issue bank drafts and checks
Offer safety deposit boxes for items and documents
There are more actions, of course, and finer categories within this broad view. Commercial banks may offer other services such as brokering insurance contracts, giving investment advice and so on. They also provide a wide variety of loans and offer other credit vehicles like cards and overdrafts. However, the common theme among these activities is that they are aimed at providing a financial service to an individual or business.
Regulations
In most countries, commercial banks are heavily regulated and this is typically done by a country’s central bank. They will impose a number of conditions on the banks that they regulate such as keeping bank reserves and to maintain minimum capital requirements.
Services by product
Commercial banks generally provide a number of services to its clients; these can be split into core banking services such as deposits, loans, and other services which are related to payment systems and other financial services.
Core products and services
Accepting money on various types of Deposit accounts
Lending money by overdraft, and loans both secured and unsecured.
Providing transaction accounts
Cash management
Treasury management
Private equity financing
Issuing Bank drafts and Bank cheques
Processing payments via telegraphic transfer, EFTPOS, internet banking, or other payment methods.
Other functions
Along with core products and services, commercial banks perform several secondary functions. The secondary functions of commercial banks can be divided into agency functions and utility functions.
Agency functions include:
To collect and clear cheques, dividends, and interest warrant
To make payments of rent, insurance premium
To deal in foreign exchange transactions
To purchase and sell securities
To act as the trustee, attorney, correspondent and executor
To accept tax proceeds and tax returns
Utility functions include:
To provide safe deposit boxes to customers
To provide money transfer facility
To issue traveler’s cheques
To act as referees
To accept various bills for payment: phone bills, gas bills, water bills
To provide various cards such as credit cards and debit cards

OKOYE OBINNA
2014/191864
ECONOMICS

Commercial banks are financial institutions that accept deposits, grant loans, and offer basic financial products such as savings accounts and certificates of deposit to individuals and businesses. Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.

The central bank through the help of commercial banks help regulate the flow of money in the economy by either offering shares or bonds to the public or by reduce interest rate. Households are being encouraged to save by the commercial banks and investors are also encouraged to get investment funds by getting loans from the bank. Commercial banks also serve as storage rooms for items like precious stones and jewelries, will, documents.

Through their intermediary role, they ensure financial inclusion, inclusive growth and sustainable economic development. Furthermore, by their uncoordinated action there is an “automatic” regulation of the supply and demand for money in the Economy in a way that no central Bank can have the knowledge to perform; and also, by identifying profitable opportunities for lending, the commercial banks, perform the allocation of the scare resources saved in society to their most efficient uses since only the most profitable business can pay the interests charged for the loans and still make a profit.

Commercial banks also promote international trade which is very important for economic growth. They provide traveller’s cheque, low interest rate for exporters, opening of letter of credit. Commercial banks also take active role in industrial and agricultural development.

Commercial Banks have always played a crucial role in the overall growth and development of any country.They play a decisive role and fuels the growth of any economy. Be it any sector, the entire fate of trade and commerce is dependent on the banking industry, and thus banks are regarded as the backbone of any economy.
They not only act as the custodian of wealth but also as resources of the country that are necessary for overall economic development of a nation.

Igweh Sixtus Ozioma
2017/247588
Answer

According to Wikipedia a commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit
It can also refer to a bank, or a division of a large bank, which deals with corporations or large/middle-sized business to differentiate it from a retail bank and an investment bank. Commercial banks include private sector banks and public sector banks.
The name bank derives from the Italian word
banco “desk/bench”, used during the Italian Renaissance era by Florentine bankers, who used to carry out their transactions on a desk covered by a green tablecloth.However, traces of banking activity can be found even in ancient times.

ROLES AND FUNCTIONS OF COMMERCIAL BANKS
Commercial banks play many roles and functions in the economy.

The general role of commercial banks is to provide financial services to the general public and business, ensuring economic and social stability and sustainable growth of the economy.

ADVANTANGES AND DISADVANTAGES OF COMMERCIAL BANKS

ADVANTAGES
1.The deposited amount with the banks is used for the overall development of the country through the financial assistance provided by the banks.
Socialism was established in the country with the help of the banks and their nationalization.
2.Banks help the unorganized and weaker sections. As a result, the loan requirements of small and marginal farmers, artisans, small entrepreneurs, and weaker sections have started getting fulfilled.
3.The commercial banks have provided financial assistance to the unemployed persons in starting their venture.

DISADVANTAGES
1.The efficiency of the banks is fast reducing.
Customer services are also fast deteriorating. As a result, the customers are getting dissatisfaction also
2.The branch managers have become weak and helpless due to fast expansion and the majority of local staff. All these adversely affect management and control.
problems of commercial banks
Disadvantages of Commercial Banks
3.The profit earning capacity of banks is also reducing due to the decline in their efficiency.
4.The significant share of loans provided by the banks is utilized only by the organized sectors of the economy, even today.
5.No change has taken place in the organizational structure of the banks, even after their fast expansion and new challenges to them.
Good progress has not been achieved in the sphere of recovery of loans by the banks. As a result, the efficient circulation of funds does not become possible.
6.The cases of fraud and embezzlement of bank funds by the bank officers and staff are also alarmingly increases

Name: Anayo Bright Udochukwu
Reg. Number: 2017/249482
Department: Economics

The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses.

With these functions, commercial banks are seen as indispensable components of the financial system by some financial analysts and monetary pundits. But a question does arise that “without them the economy may bleed to death.”
I agree without commercial banks that any economy without them the economy will left to bleed to death.

To ascertain the claim, commercial banks are an important part of the economy. Not only do they provide consumers with an essential service, but they also help create capital and liquidity in the market. This entails taking money that their customers deposit for their savings and lending it out to others. Commercial banks play a role in the creation of credit, which leads to an increase in production, employment, and consumer spending, thereby boosting the economy. As such, commercial banks are heavily regulated by central banks. For instance, central banks impose reserve requirements on commercial banks. This means banks are required to hold a certain percentage of their consumer deposits at the central bank as a cushion if there’s a rush to withdraw funds by the general public.

Commercial banks are important to the economy because they create capital, credit, and liquidity in the market. Therefore, they are the binding wire that stimulate the activities of an economy. Perhaps they are instrument in the hands of the central banks.

ANENE VICTORIA CHIOMA
2017/242435
ECONOMICS
victoria.anene.242435@unn.edu.ng
toria20@simplesite.com
According to financial analyst and monetary pundits, without commercial banks the economy would bleed.Their belief is not farfetched as commercial banks are the closest and most accessible financial institution.They grant loan, accept deposits and offer basic financial product such as savings account.
With the existence and operation of the central bank,basic monetary police are made in order to shape the economic structure..

Name: Ani Gabriel Ogbonna
Reg. Number: 2017/249483
Email: anigabriel05@gmail.com

A commercial bank is a financial institution that grants loans, accepts deposits, and offers basic financial products such as savings accounts and certificates of deposit to individuals and businesses. It makes money primarily by providing different types of loans to customers and charging interest.
Commercial banks play an important role in the financial system and the economy. As a key component of the financial system, banks allocate funds from savers(surplus) to borrowers(deficit) in an efficient manner. They provide specialized financial services, which reduce the cost of obtaining information about both savings and borrowing opportunities. These financial services help to make the overall economy more efficient. The commercial Bank is the integral part of the Economy, if the bank fail definitely the Economy will crumble, in other words whatever affect to commercial Bank affect the Economy. Imagine a world without commercial Bank, Where would people go to borrow money?, What would people do with they savings?, Would one be able to borrow (save) as much as you need, when you need it, in a form that would be convenient for you?, What risks might you face as a saver (borrower)?. With prevailing insecurities in Nigeria and commercial bank role assumed away, this means that the only people that save money are those with instrument of suppression. The above question shows that the role of commercial bank can never be neglected.
Commercial Banks have always played an important position in the country’s economy. They play a decisive role in the development of the industry and trade. They are acting not only as the custodian of the wealth of the country but also as resources of the country, which are necessary for the economic development of a nation.
Savings pooled by commercial banks are utilized to a greater extent for development purposes of various regions in the country. It ensures fuller utilization of resources. Infact without the commercial bank the word “Economy” may not really exist. Indeed, the commercial banks is an indispensable components of the financial systems. They kinda are rare in the Economy.

Name:Eze Udoka Chidiebube
Reg no:2017/242428
Dept:Economics
Level:300 level
Commercial banks are very essential in our economy and Yes,our economy will bleed to death if there are commercial banks.They also help create capital and liquidity in the market. This entails taking money that their customers deposit for their savings and lending it out to others. Commercial banks play a role in the creation of credit, which leads to an increase in production, employment, and consumer spending, thereby boosting the economy. As such, commercial banks are heavily regulated by central banks. For instance, central banks impose reserve requirements on commercial banks.
1.The commercial banks help in mobilising savings through network of branch banking. People in developing countries have low incomes but the banks induce them to save by introducing variety of deposit schemes to suit the needs of individual depositors.
2. Financing Industry:
The commercial banks finance the industrial sector in a number of ways. They provide short-term, medium-term and long-term loans to industries. The bankseto retailr and wholesalers to stock goods in which they deal. They also help in the movement of goods from one place to another by providing all types of facilities such as discounting and accepting bills of exchange, providing overdraft facilities, issuing drafts, etc.
4. Financing Agriculture:
The commercial banks help the large agricultural sector in developing countries in a number of ways. They provide loans to traders in agricultural commodities. They open a network of branches in rural areas to provide agricultural credit. They provide finance directly to agriculturists for the marketing of their produce, for the modernisation and mechanisation of their farms, for providing irrigation facilities, for developing land, etc.
5. Financing Consumer Activities:
People in underdeveloped countries being poor and having low incomes do not possess sufficient financial resources to buy durable consumer goods. The commercial banks advance loans to consumers for the purchase of such items as houses, scooters, fans, refrigerators, etc. In this way, they also help in raising the standard of living of the people in developing countries by providing loans for consumptive activities.
6. Financing Employment Generating Activities:
The commercial banks finance employment generating activities in developing countries. They provide loans for the education of young person’s studying in engineering, medical and other vocational institutes of higher learning.

Name: Ugorji Ijeoma Judith
Reg No: 2017/243088
Department: Economic.
Commercial banks are financial institutions engaged in banking activities. They are financial intermediaries that provide grassroot financial services to the public. The commercial banks are a major component of the financial system and their role to Economic development cannot be overemphasized.
The commercial banks are regulated by the Central Bank of a country. Some of these regulations are seen in the aspect of ensuring that these banks keep a certain stipulated amount of money with the central bank which is known as bank reserves. This regulation is to ensure commercial banks do not run totally out of cash . Another regulation is in the aspect of ensuring that each bank maintain the minimum capital requirements. This is also aimed at ensuring strong financial institutions in place.
The core service of commercial banks include accepting money from individuals and businesses on various types of deposit account, lending money and loans, issuing bank drafts and bank cheques, cash management, processing different transactions and payments and lots more.
Functions of commercial banks
They provide core banking services to the public through collecting deposits, in form of savings. They provide safe deposit boxes for customers.
They provide loans to businesses, Individuals for the purpose of investment. This function is critical to economic development since through investments, employment are created and income is increased.
Credit Creation is another function of the commercial banks. Credits are created through deposits accepted from the general public. This deposits are given out as loans for business on which interest are paid. This function is in line with the objective of the financial system to channel funds from area of surplus to area of deficit.
The establishment of commercial banks has brought a lot of innovation to the payment system. Individuals and businesses can now make payments on various transactions in a much safer, accountable and easier ways via internet banking services.

COMMERCIAL BANK AND THE ECONOMY:
Using Nigeria economy (growth and development as focus).

The role of commercial bank in the development of the national economy is quiet important as commercial banks constitute the intermediary between the apex bank and the general public. Commercial banks provides the needed channel for savings, mobilize deposits from the surplus unit of the economic sector and provide the needed funds for investment and development in different sector of the Nigerian economy. Commercial bank also provides advisory services to prospective investors regarding the prospect and viability of the intended project.

The commercial bank is financial institutions which accept deposit inform of savings and current account, provide safekeeping and serve as channel for easy retrieval when needed.
Commercial banks are greatly required in the country for the development of the nation. Hence they serve as means for obtaining loanable funds for developmental projects in other to achieve macroeconomic stability in the nation. They also facilitate international trade through the provision of foreign exchange and extend credit to importers.
Commercial act as agent to other institutions in the collection of revenue, thereby providing funds for economic development.
Commercial banks are the pillar of accessing loans as they facility the grant of short-term, medium and longterm loans in the economy.

Commercial banks facilitate easy payment through the provision of cheques and other financial instrument, they enhance international travels through the provision of travellers cheques, and they create money for the central bank and provide means for the transfer of funds which promotes economic activities.

Commercial banks provide backup liquidity to the economy. They interprete monetary policy and provide some “value added” from transferring funds from savers to borrowers and providing liquidity. The research therefore seek to appraise The role of commercial banks in the economic development of Nigeria.

Commercial banks are greatly required in the country for the development of the nation. Hence they serve as means for obtaining loanable funds for developmental projects in other to achieve macroeconomic stability in the nation. They also facilitate international trade through the provision of foreign exchange and extend credit to importers.
Commercial act as agent to other institutions in the collection of revenue, thereby providing funds for economic development

Economic development is the development of economic wealth of a community, region or nation so as to improve their well-being .It seek to improve the quality of life and economic well-being of a community through the creation and retention of jobs , incomes and the tax base. Economic growth can be viewed as the increase or growth of the GDP, real national income, or per capita income.. When the GDP of a nation rises economists refer to it as economic growth.

Name: Enyum Joseph Ikechukwu
Reg No:2017/249498
Dept: Economics

A commercial bank is a kind of financial institution that carries all the operations related to deposit and withdrawal of money for the general public, providing loans for investment, and other such activities. These banks are profit-making institutions and do business only to make a profit. Commercial banks play an important role in the financial system and the economy. As a key component of the financial system, banks allocate funds from savers to borrowers in an efficient manner. They provide specialized financial services, which reduce the cost of obtaining information about both savings and borrowing opportunities. These financial services help to make the overall economy more efficient.

Commercial banks generally provide a number of services to its clients; these can be split into core banking services such as deposits, loans and other services which are related to payment systems and other financial services.
The core services includes:
1. Accepting money on various types of deposit accounts
2. Lending money by overdraft and loans both secured and unsecured.
3. Providing transaction accounts
4. Cash management
Along with the core products and services, commercial banks perform several secondary functions.The secondary functions of commercial banks can be divided into agency and utility functions
Agency functions include:
1. To collect and clear cheques , dividends and interest warrant
2. To make payment of rent, insurance premium
3. To deal in foreign exchange transactions
Utility functions include:
1.To provide safe deposit boxes to customers
2. To provide money transfer facility
3. To issue traveler’s cheques

Commercial banks are indispensable in an economy, the functions of commercial banks can not be overemphasized, they assist in channeling funds from those who have excess money to those who need money for investment ,among others, They provide a safe place for people to save their money and other valuables and offers other services like payments of utilities etc

An economy needs investment to be buoyant and fruitful and the commercial bank provides a means for people to borrow money to invest surely without commercial banks and economy will bleed because the financial system will be greatly affected, foreign exchange services are also provided by commercial banks such as purchase and sell of foreign currencies, now imagine an economy without commercial banks. Doom shall befall that economy.

NAME: IJE VORDA GOODNESS
DEPARTMENT: ECONOMICS
REG NO: 2017/249514
EMAIL: vordagoodness78@gmail.com

ANSWERS
It’s no news that no country can advance economically with grossly inefficient commercial banking system. Economic development involves investment in various sector of the economy and commercial banks perform the role of mobilizing funds to industries.

Commercial bank refers to any financial institution that accepts deposits from the public, offers checking account services, provide various credit facilities, and offers savings accounts to individuals and small businesses. Most individuals bank with commercial banks.
Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.
Commercial banks keep the economy alive by actively providing funds for capital goods that will be used to aid production that boost the economy.
Furthermore, commercial banks are the major actors in financial system as they are the channel through which government implement their monetary policies. The establishment of commercial banks in rural areas encourage savings. This savings are then given as credit facilities to investors who multiply this monies. Investors pay interest for loans and a part of this interest is remitted to the savers who are encouraged to save more and which provide more money for investment.
Commercial banks also promote international trade which is very important for economic growth. They provide traveller’s cheque, low interest rate for exporters, opening of letter of credit. Commercial banks also take active role in industrial and agricultural development.
Without a functional commercial banking system the economy will bleed to death.

NAME: OKPOR MARTHA ASHINEDU
REG. NO: 2017/241430
DEPARTMENT: ECONOMICS
LEVEL: 300L
ANSWER:
Commercial banks provide intermediary role between sectors of surplus fund and that of deficit liquidity. By so doing, they ensure growth sustainable economic development. They are the oil that lubricate the financial engine of the economy.
Without banks, we wouldn’t have loans to buy a house, we wouldn’t have paper money to things we need. We wouldn’t have cash machines to roll out paper money on demand from our account. With the advent of the banking system, we did not have to barter our way through life anymore. For example swapping eight and a half goats for a single cow. Also with commercial banks, asset management is made possible. A vault sure beats a mattress as a place to store cash. So banks started by keeping money safer, and gradually graduated into helping customers generate a return on their stash. It also helped in the efficient issuance of loans. Before banks got into lending, borrowing had to be done from family, friends or thugs which often eh in tears, punches or a combination of the two. Loan officers introduced an objective, risk-dispersed intermediary between givers and takers.
Thus, without commercial banks in a country, it would negatively affect the economy causing the economy to bleed.

NAME: OBODO CHISOM JESSICA
REG NO: 2017/249538
EMAIL: chisom.obodo.249538@unn.edu.ng

YES, I AGREE
Commercial banks play a key role in the economy both at a national and global level. The importance of commercial banks include the fact that they serve as a trusted and safe place where the funds of people and businesses can be kept on their behalf, reducing the necessity to keep large sums of money on the private or business premises. On the international level, commercial banks serve as a source for transferring money from one country to another, eliminating the need to travel with money. The money paid by depositors into their savings accounts are also used by the banks to foster economic growth through the lending of such money to various businesses and individuals.

Commercial banks are an important part of the economy. Not only do they provide consumers with an essential service, but they also help create capital and liquidity in the market. This entails taking money that their customers deposit for their savings and lending it out to others. Commercial banks play a role in the creation of credit, which leads to an increase in production, employment, and consumer spending, thereby boosting the economy.

Commercial Banks have always played a crucial role in the overall growth and development of any country.They play a decisive role and fuels the growth of any economy. Be it any sector, the entire fate of trade and commerce is dependent on the banking industry, and thus banks are regarded as the backbone of any economy.
They not only act as the custodian of wealth but also as resources of the country that are necessary for overall economic development of a nation.

OKORORIE EMMANUEL KELECHI
2017/242947
ECONOMICS

The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is where most people do their banking. Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.
Commercial banks are an important part of the economy. Not only do they provide consumers with an essential service, but they also help create capital and liquidity in the market. This entails taking money that their customers deposit for their savings and lending it out to others. Commercial banks play a role in the creation of credit, which leads to an increase in production, employment, and consumer spending, thereby boosting the economy. As such, commercial banks are heavily regulated by central banks. For instance, central banks impose reserve requirements on commercial banks. This means banks are required to hold a certain percentage of their consumer deposits at the central bank as a cushion if there’s a rush to withdraw funds by the general public.
Commercial banks play a key role in the economy both at a national and global level. The importance of commercial banks include the fact that they serve as a trusted and safe place where the funds of people and businesses can be kept on their behalf, reducing the necessity to keep large sums of money on the private or business premises. On the international level, commercial banks serve as a source for transferring money from one country to another, eliminating the need to travel with money. The money paid by depositors into their savings accounts are also used by the banks to foster economic growth through the lending of such money to various businesses and individuals.
An importance of commercial banks is the role they play in the development of the economy. They help various consumers, both individuals and businesses, purchase items that they would not have been able to purchase without financial assistance from the banks. This includes the purchase of cars, houses and more capital intensive items like machinery or manufacturing plants. They also make it easier for their customers to repay the money through the arrangement of long-term financial plans where the money will be spread over a determined length of time. The advantage is that this makes it easier for the borrowers to repay the money, even if they have to pay interest on the loan as a sort of service charge.

Okere Success chigoziem
2017/243145
Education economics
Introduction
Consensus refers to a set of free-market economic policies supported by prominent financial institutions such as the International Monetary Fund, the World Bank, and the U.S. Treasury. A British economist named John Williamson coined the term Washington Consensus in 1989.
The ideas were intended to help developing countries that faced economic crises. In summary, The Washington Consensus recommended structural reforms that increased the role of market forces in exchange for immediate financial help. Some examples include free-floating exchange rates and free trade.
Washington Consensus, a set of economic policy recommendations for developing countries, and Latin America in particular, that became popular during the 1980s. The term Washington Consensus usually refers to the level of agreement between the International Monetary Fund (IMF), World Bank, and U.S. Department of the Treasury on those policy recommendations. All shared the view, typically labelled neoliberal, that the operation of the free market and the reduction of state involvement were crucial to development in the global South.
The Original Principles of The Washington Consensus
These are the ten specific principles originally set out by John Williamson in 1989:
1. Low government borrowing. The idea was to discourage developing economies from having high fiscal deficits relative to their GDP.
2. Diversion of public spending from subsidies to important long-term growth supporting sectors like primary education, primary healthcare, and infrastructure.
3. Implementing tax reform policies to broaden the tax base and adopt moderate marginal tax rates.
4. Selecting interest rates that are determined by the market. These interest rates should be positive after taking inflation into account (real interest rate).
5. Encouraging competitive exchange rates through freely-floating currency exchange.
6. Adoption of free trade policies. This would result in the liberalization of imports, removing trade barriers such as tariffs and quotas.
7. Relaxing rules on foreign direct investment.
8. The privatization of state enterprises. Typically, in developing countries, these industries include railway, oil, and gas.
9. The eradication of regulations and policies that restrict competition or add unnecessary barriers to entry.
10. Development of property rights.
Nigeria flawed development
The story of Nigeria development is one interesting one, and not sufficiently told or understood outside of Nigeria and Africa more generally. In the 1970s its government pursued the conventional import-substitution industrialisation strategy of that time. The exchange policy adopted favoured a high valuation of the Nigerian naira, deliberately to assist local producers to source foreign inputs cheaply. Similarly, the increasing revenue from oil exports also precipitated this over-valuation of the currency. However, these factors affected adversely agricultural production which had previously been the main revenue source for the economy. So, with the oil price crash in early 1980, Nigeria suffered huge shocks: the depletion of its foreign reserves and the emergence of huge trade deficits.
To alleviate these problems, the IMF and the World Bank proposed neoliberal policies of deregulation and liberalisation. It was argued that subsidisation, which many governments in the developing countries were adopting to boost capital accumulation, was in fact the reason why most of them ran very low surpluses (worsened by low tax revenues), which then in turn generated low government savings to be mobilised by the financial institutions. In similar fashion, it was suggested that the use of ceilings prevented interest rates from playing the role of balancing the supply and demand for money.
Since the mid-1980s Nigeria has gradually embraced most, if not all, of the policies contained in the ‘Washington Consensus’. Financial markets have been liberalised, public entities privatised and most trade restrictions removed. However, despite all these efforts, the overall development of the economy and the well-being of the populace have stagnated or deteriorated in some key aspects. Production from manufacturing has declined tremendously as a proportion of the national output culminating in the growing number of unemployed persons (rising from 11.9% in 2005 to over 23% in 2011) and the increasing number of vulnerable poor persons (over 60% of the Nigerian people now live below US$1.25 a day).

Manufacturing output (% of GDP)
The bane of this persistent underdevelopment in Nigeria can be attributed to the low and unattractive rate of profit accruing to real production in the country. The arguments of The Wealth of Nations, as articulated by Adam Smith, lend sanctity to the pursuit of profit. Famously, according to Smith, it’s not as a result of the benevolence of the butcher, the brewer or the baker that we expect our dinner, but rather from their regard for their own self-interest. This salient factor – personal gain/profit – determines how much capital is committed to a particular productive process, and has often been low and unattractive in Nigeria.
J. M. Keynes was also keen to point out that the consideration of the entrepreneur’s own profit is the sole factor that determines how much he employs his capital in any productive process. In essence, when discussing issues that might be inhibiting the growth of real capital accumulation, it is thus logical that this central motivator should at least be considered, especially to assess if it’s sufficient to induce accumulation in a particular process in a given country at a particular time.
This is an absolutely key point. The truth is that the probability of making sufficient profit in a real production process in Nigeria, after compensating for the various associated risks, is on average negative (assuming here that all the required capital is borrowed).
As a principle, Smith asserted that, if an entrepreneur borrows money and uses it as capital, he expects both to restore the capital and pay the interest without alienating or encroaching upon any other source of revenue. As such, when the profits which can be made by the use of capital are diminished, the price which can be paid for the use of it (the interest rate) must necessarily be diminished with them. Keynes too remarked that the rate of interest on capital should be below the rate of profit accruing from that capital. However, as Table 1 above shows, this has often not been the case for Nigeria. Interest rates have generally been high, with the result that the sober entrepreneur, who will give for the use of money no more than a part of what he or she is likely to make by the use of it, has mostly ventured not to bother borrowing and investing in the country.
Further drawing on Smith’s view that capitalists tend to employ their capitals in countries where the profits of trade are higher, it should therefore come as no surprise that the level of real investment in Nigeria has stagnated over the years (Figure 2). For many factors conspire to affect, and undermine, the rate of profit attributable to real production in Nigeria. Chief among them are: the uneven competition between Nigerian capital and capital coming from core and semi-peripheral economies; the high internalised external costs, particularly for electricity generation and transportation; ineffective demand for domestic products, exacerbated by the increasing costs of medical care incurred by poor people who have no succour from the government; and, finally, the increasing actual cost of capital, often precipitated by the rising influx of liquid capital and weak enforcement of contracts.

Investment ratio (% of GDP)
In conclusion, the first move that needs to be made to deal with Nigeria’s many contemporary problems of development should be to sweep away these many structural obstacles which decimate the rate of profit accruing to real production. Recommendations or solutions should focus, above all, on alleviating the problems that inhibit real capital assets from reproducing sufficient returns. Nigerian policy-makers should create a ‘congenial’ environment that ensures that the rate of profit accruable to real production is maintained at a level whereby the would-be capitalist deems it satisfactory to invest in a real productive process in the country. Such an environment definitely does not include completely unfettered capital and trade mobility

Name: Asogwa Arinze Godwin
Reg no: 2016/235173
Department: Economics
Commercial banks and the economy
A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit

It can also refer to a bank, or a division of a large bank, which deals with corporations or large/middle-sized business to differentiate it from a retail bank and an investment bank. Commercial banks include private sector banks and public sector banks.
Primary functions of the commercial bank are:
1. Commercial banks accept various types of deposits from the public especially from its clients, including saving account deposits, recurring account deposits, and fixed deposits. These deposits are returned whenever the customer demands it or after a certain time period.
2. Commercial banks provide loans and advances of various forms, including an overdraft facility, cash credit, bill discounting, money at call, etc. They also give demand and term loans to all types of clients against proper security. They also act as trustees for wills of their customers etc.
3. The function of credit creation is generated on the basis of credit and payment intermediary. Commercial banks use the deposits they absorb to make loans. On the basis of check circulation and transfer settlement, the loans are converted into derivative deposits. To a certain extent, the derivative funds of several times the original deposits are increased, which greatly improves the driving force of commercial banks to serve the economic development.The general role of commercial banks is to provide financial services to general public and business, ensuring economic and social stability and sustainable growth of the economy. Commercial banks mostly provide short term loans and in some cases medium term financial assistance also to small scale units. Banks play an important role in capital formation, which is essential for the economic development of a country. They mobilize the small savings of the people scattered over a wide area through their network of branches all over the country and make it available for productive purposes.

Commercial Banks have always played an important position in the country’s economy. They play a decisive role in the development of the industry and trade. They are acting not only as the custodian of the wealth of the country but also as resources of the country, which are necessary for the economic development of a nation.
We shall now discuss the contributions made by the banks for the economic development of the nation.

Role of Commercial banks in economic development of a country
1. Capital Formation
Banks play an important role in capital formation, which is essential for the economic development of a country. They mobilize the small savings of the people scattered over a wide area through their network of branches all over the country and make it available for productive purposes.

Now-a-days, banks offer very attractive schemes to attract the people to save their money with them and bring the savings mobilized to the organized money market. If the banks do not perform this function, savings either remains idle or used in creating assets, which are low in scale of plan priorities.

2. Creation of Credit
Banks create credit for the purpose of providing more funds for development projects. Credit creation leads to increased production, employment, sales and prices and thereby they cause faster economic development.

3. Channelizing the Funds to Productive Investment
Banks invest the savings mobilized by them for productive purposes. Capital formation is not the only function of commercial banks. Pooled savings should be distributed to various sectors of the economy with a view to increase the productivity of the nation. Then only it can be said to have performed an important role in the economic development of the nation.

Commercial Banks aid the economic development of the nation through the capital formed by them. In India, loan lending operation of commercial banks subject to the control of the RBI. So our banks cannot lend loan, as they like.

4. Fuller Utilization of Resources
Savings pooled by banks are utilized to a greater extent for development purposes of various regions in the country. It ensures fuller utilization of resources

5. Encouraging Right Type of Industries
The banks help in the development of the right type of industries by extending loan to right type of persons. In this way, they help not only for industrialization of the country but also for the economic development of the country. They grant loans and advances to manufacturers whose products are in great demand. The manufacturers in turn increase their products by introducing new methods of production and assist in raising the national income of the country.

6. Bank Rate Policy
Economists are of the view that by changing the bank rates, changes can be made in the money supply of a country. In our country, the RBI regulates the rate of interest to be paid by banks for the deposits accepted by them and also the rate of interest to be charged by them on the loans granted by them.

7. Bank Monetize Debt
Commercial banks transform the loan to be repaid after a certain period into cash, which can be immediately used for business activities. Manufacturers and wholesale traders cannot increase their sales without selling goods on credit basis. But credit sales may lead to locking up of capital. As a result, production may also be reduced. As banks are lending money by discounting bills of exchange, business concerns are able to carryout the economic activities without any interruption.

8. Finance to Government
Government is acting as the promoter of industries in underdeveloped countries for which finance is needed for it. Banks provide long-term credit to Government by investing their funds in Government securities and short-term finance by purchasing Treasury Bills.

9. Bankers as Employers
After the nationalization of big banks, banking industry has grown to a great extent. Bank’s branches are opened in almost all the villages, which leads to th

Agbo Jennifer Amarachi
2017/249476
jenniferamarachi.agbo@gmail.com

Commercial bank refers to a financial institution that accepts deposit, offers checking account services, and offers basic financial products like certificates of deposits and savings accounts to individuals and small businesses.

They are important to the Economy because they create capital, credit and liquidity in the market. They play a role in the creation and provision of credit, which leads to increase in productivity, employment, and consumer spending thereby boosting the Economy.

Through their intermediary role, they ensure financial inclusion, inclusive growth and sustainable economic development. Furthermore, by their uncoordinated action there is an “automatic” regulation of the supply and demand for money in the Economy in a way that no central Bank can have the knowledge to perform; and also, by identifying profitable opportunities for lending, the commercial banks, perform the allocation of the scare resources saved in society to their most efficient uses since only the most profitable business can pay the interests charged for the loans and still make a profit.

Along with the rest of the financial system, the commercial banks help in achieving Economic development through the provision of payment services which reduces risk elements for businesses, they also assist in the effective allocation of credit by matching savings and investment for individuals and firms. They as well provide cash needed by small and medium size Enterprise when they are experiencing liquidity shortages. All these stated above help to stimulate the Economy and ensure its smooth flow and progress.

NAME: OZUEM DEBORAH OGHENEKEVWE
REG NO: 2017/249572
ECONOMICS
EMAIL: deborah.ozuem.249572@unn.edu.ng

Commercial banks are financial institutions which accept deposits and other valuables from the public for safe keeping, with the sole aim of making profit. In order words, they perform the services of holding money in accounts and making out loans from their pool of total deposits for which interests are charged. They are usually owned by either private individuals or institutions. Examples: First Bank of Nigeria, Zenith Bank, etc.
I agree with the argument that commercial bank are like the backbone of the financial system and without them, the economy would suffer. This is because of the invaluable roles and functions that the commercial banks play in the economy.
1. They accept deposits from the public and other valuables for safekeeping.
2. They deal directly with the public and individuals. Without commercial banks, individuals would not be able to transact or carry out banking activities.
3. They also facilitate economic activities by making loans readily available to those who need them thereby aiding investment and consequently growth in the economy.
4. They serve as financial intermediaries between providers of capital and borrowers.
5. Commercial banks can act as agent of payment on behalf of their customers.
6. Commercial banks make foreign currencies available to their customers. They participate in the foreign exchange market and thus help in solving any problem relating to foreign exchange.
7. They can also act as the agent for their customers in the purchase or sale of securities.
8. Commercial banks facilitate international trade by providing credit to exporters.
9. They offer financial advice to their clients on financial projects to understake.
10. They are also responsible for preparing and sending bank statement/ statement of account to their customers.
We see that without commercial banks, all these functions which obviously are important for every successful financial system would not be performed and the economy would suffer immensely.

Name: Ugochukwu Onyinyechi Marycynthia
Reg no: 2017/249580
Department: Economics

THE COMMERCIAL BANKS AND THE ECONOMY
Commercial banks play an important role in the financial system and the economy. They provide specialized financial services, which reduce the cost of obtaining information about both savings and borrowing opportunities. These financial services help to make the overall economy more efficient. The general role of commercial banks is to provide financial services to general public and business, ensuring economic and social stability and sustainable growth of the economy.
Commercial banks mostly provide short term loans and in some cases medium term financial assistance also to small scale units.Commercial banks provide retail banking services to household and business customers. They are licensed deposit-takers – providing a range of savings accounts for households and businesses. They are licensed to lend money (and thereby “create” money e.g. in the form of loans, overdrafts and mortgages). The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is a financial institution that grants loans. The bank’s funds come from money deposited by the bank customers in saving accounts, checking accounts, money market accounts, Each market operates under different trading mechanisms, which affect liquidity and control.
Functions of Commercial Banks
1. Accepting Deposits: Banks attract the idle savings of people in the form of deposits.
2. Demand deposits, also known as current accounts
3. Fixed Deposits or Time Deposits
4. Savings Bank Deposits
5. Giving Loans
6. By allowing an Overdraft
7. By Creating a Deposit
8. Discounting Bills
Interest income is the primary way that most commercial banks make money. The lenders need to repay the borrowed funds at a higher interest rate than what is paid to depositors. The bank is able to profit from the interest rate spread, which is the difference between interest paid and interest received. Interest received on various loans and advances to industries, corporates and individuals is bank’s main source of income. Interest on loans: Banks provide various loans and advances to industries, corporates and individuals. The interest received on these loans is their main source of income.

Ideba Tochukwu Emmanuel
2017/241435

The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is where most people do their banking.
Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.

The banking sector is an industry and a section of the economy devoted to the holding of financial assets for others and investing those financial assets as a leveraged way to create more wealth. The sector also includes the regulation of banking activities by government agencies, insurance, mortgages, investor services, and credit cards.

With various Economic functions of the commercial Bank listed above, if the commercial Bank cease to exist, the Economy will suffer in that the channel by which funds are transfer from the surplus economic unit to the deficit economic unit will cease to exist. This will result to fall in Economic growth and also result to negative multiplier effect ( investment falls, employment falls, income falls , poverty continues). It will result to lose of fast financial services provided by the commercial Bank to meet daily Economic activities both locally and internationally, this will result to lose of many opportunities.

Nnamani, Great Ogomuegbunam
2017/249532
Economics
nnamanigreat20@gmail.com

Commercial banks are financial institutions that accept deposits, grant loans, and offer basic financial products such as savings accounts and certificates of deposit to individuals and businesses. To survive, these banks make money primarily by providing different types of loans to customers and charging interest. They equally embrace other sources of income through institutional investments.
Commercial Banks have always played an important role in the economy, and without them, the economy not only bleeds to death, but is buried. Specifically, they play a decisive role in the development of the industry and trade. They act, not only as the custodian of the wealth in the country, but also as resources of the country, which are necessary for the economic development of a nation. Through the credit facilities (short term) provided by commercial banks, investors access funds. These funds are invested in the economy, and They provide foreign exchange to clients who are in the import and export business, by buying and selling foreign currency. However, banks must get permission from the regulatory body, mainly the central bank, before dealing with foreign exchange. A commercial bank also acts as a custodian of precious stones and other valuables. They provide customers with lockers where they can put their jewelry, precious metals, and crucial documents.
In the absence of commercial banks, their key roles of capital formation, creation of credit and channeling of funds which sustains the economy are abandoned. When these funds do not get to investors who need, the economy crumbles.

A commercial bank is a kind of financial institution that carries all the operations related to deposit and withdrawal of money for the general public, providing loans for investment, and other such activities. These banks are profit-making institutions and do business only to make a profit. Commercial banks play an important role in the financial system and the economy. As a key component of the financial system, banks allocate funds from savers to borrowers in an efficient manner. They provide specialized financial services, which reduce the cost of obtaining information about both savings and borrowing opportunities. These financial services help to make the overall economy more efficient.

Imagine a World Without Banks!

If there were no banks…
Where would you go to borrow money?
What would you do with your savings?
Would you be able to borrow (save) as much as you need, when you need it, in a form that would be convenient for you?
What risks might you face as a saver (borrower)?

How Banks Operate
Banks operate by borrowing funds-usually by accepting deposits or by borrowing in the money markets. Banks borrow from individuals, businesses, financial institutions, and governments with surplus funds (savings). They then use those deposits and borrowed funds (liabilities of the bank) to make loans or to purchase securities (assets of the bank). Banks make these loans to businesses, other financial institutions, individuals, and governments (that need the funds for investments or other purposes). Interest rates provide the price signals for borrowers, lenders, and banks.

Through the process of taking deposits, making loans, and responding to interest rate signals, the banking system helps channel funds from savers to borrowers in an efficient manner. Savers range from an individual with a $1,000 certificate of deposit to a corporation with millions of dollars in temporary savings. Banks also service a wide array of borrowers, from an individual who takes a loan of $100 on a credit card to a major corporation financing a billion-dollar corporate merger. The most common uses of these funds are to make real estate and commercial and industrial loans. Individual banks’ asset and liability composition may vary widely from the industry figures, because some institutions provide specialized or limited banking services. Today, in addition to banks, there are several other important types of financial intermediaries. These include savings institutions, credit unions, insurance companies, mutual funds, pension funds, finance companies, and real estate investment trusts (REITS).

Advantages of commercial banks are as follows:
(i) Commercial banks facilitate savings and capital formation by accepting deposits from the households and firms.
(ii) They offer loans to the households for consumption purposes and to the firms for investment purpose. This raises the level of Aggregate Demand in the economy which is very important during depression.
(iii) Commercial banks offer overdraft facilities to the firms. This helps the firms in fulfilling their emergent financial requirements.
(iv) They create credit and accordingly contribute to the flow of money in the economy.