Modern Banking
Chapter One
What are Banks and
What Do They Do?
1.1. Introduction
The term "banking" can be applied to a large range of financial institutions, from savings
and loans organisations to the large money-centre commercial banks in the USA, or from
the smallest mutually owned building society to the "big four" shareholder owned banks
in the UK. Many European countries have large regional/cooperative banks in addition to
three to five universal banks. In Japan, the bank with the largest retail network is Sumitomo
Mitsui Banking Corporation, but its main rival for savings deposits is the Post Office.
The objective of this chapter is to provide an overview of banking and the role played by
banks in an increasingly complex financial world. It begins with a review of the meaning
of banking, identifying the features of banks that distinguish them from other financial
institutions. The most common forms of organisational structure for banks in the developed
world are reviewed in section 1.3. Section 1.4 considers the relationship between the central
banks and commercial banks, in ... read full excerpt from Modern Banking ebook
