The banking sector comprises financial institutions, primarily banks, that provide a range of services to individuals, businesses, and governments. These services include accepting deposits, lending money, facilitating transactions, and offering various financial products. Essentially, the banking sector acts as a crucial intermediary in the economy, connecting those with surplus funds (depositors) to those who need funds (borrowers).
Key aspects of the banking sector:
Financial Intermediation:
Banks act as intermediaries, taking deposits from individuals and businesses and then lending those funds out, facilitating the flow of money.
Core Functions:
Banks provide essential services like accepting deposits, offering loans, facilitating payments, and providing other financial products like credit cards and savings accounts.
Importance to the Economy:
The banking sector plays a vital role in the economy by enabling economic activities, promoting financial inclusion, and supporting investment and growth.