BANKING AS A BUSINESS
Bank money and many other financial services are today provided by which are , institutions like commercial banks that take deposits of funds from one group and lend these funds to other. groups. For example, financial intermediaries accept checking deposits from households and firms and then lend these funds out to other households and businesses for a variety of purposes. Financial institutions differ from other businesses because their assets are largely financial rather than real assets like plant and equipment. .
The largest class ‘of financial intermediaries comprises commercial banks, institutions which contain of the nation, accountant or able Other important categories are life insurance companies, pension funds. and money market mutual funds. Altogether. in the middle of 1998. intermediaries had a total , of $288 of assets and liabilities.
Transfer funds from lenders to borrower In doing this. they create financier as (like checking and savings accounts). But from a macroeconomic vantage the most important asset is bank money (or checking accounts) primarily provided by commercial b and P.
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