Banks: History, Classification and Functions

Essay by Vladimir0405University, Bachelor'sB+, April 2010

download word file, 12 pages 4.0

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made by: professor:

Vladimir Cvetanovski prof. Vesna Tasevska

Faculty for economic sciences


FON University

Skopje, 2009



History of banks and banking activities

The beginnings of banking activities

First banks

Structure of the banking sector

3.1. The Central bank

3.2. Commercial banks

3.3. Universal banks

3.4 Investment banks

3.5. Private banks

4. Functions of a modern bank

5. Conclusion

6. Bibliography



In every fair-oriented economy there are many economic subjects who belong to one of the two following sectors: the population sector or the enterprise sector. All these subjects ( individuals, families or enterprises ) have a certain income, and also carry out a certain level of spending of that income. Depending on the level of spending, the subjects in the fair-economy can achieve either a financial surplus ( if the income is greater than the spending ), or a financial deficit ( when the spending is greater than the income ).

The role of the financial system, especially the banking system, is to provide mechanisms for unobstructed and efficient circulation and allocation of the savings that belong to the subjects with financial surplus to the subjects with financial deficit. The key elements in this role are the institutions known as banks.

Basically, banks are autonomous financial institutions that provide various financial services connected with money to the economic subjects, and take part in the creation of new money with the method of partial reserves.

In this work, I will present a brief history of the early banking activities and the path they had opened for the forming of the first banks as we know them now, the rules for classification of the banks and also describe the basic aspects of bank activities and functions.

History of...