Business Questions and Answers

Start Your Free Trial

Discuss the role commercial banks have played toward economic growth of the country.

Expert Answers info

Walter Fischer eNotes educator | Certified Educator

calendarEducator since 2013

write4,086 answers

starTop subjects are Literature, History, and Business

Commercial banks play a very important role in economic development. It is the very rare that an individual has the cash needed to start a business from the bottom up, and it is very rare for existing businesses to expand or recapitalize (in effect, replace old, worn out equipment with new, more efficient equipment) without having to borrow from a financial institution.

Commercial banks are in the business of moving money. They secure individuals’ and families’ money by providing a physically secure space while paying depositors, those who place their cash with banks for safe keeping, interest for the privilege of having those depositors’ money, which the banks use for other commercial activities. They take the money left with them by depositors and lend it to individuals and businesses, charging interest on the loan, a key way in which the bank makes money for its owners and...

(The entire section contains 467 words.)

Unlock This Answer Now