Banks have become a complex world, which not everyone can understand, this article can help you understand the banking world without having to take a course in finance or come from a family of bankers.

What you should know about banks 

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Banks

Banks

It is known as a financial institution that manages the money of its customers, makes loans and charges interest, these interests are the operational bases of banks. They collect money from different characters, companies or individuals, these transactions are mainly based on the trust that exists between the parties.

How does it work?

The banks grant loans whose main objective is the return of the same with interest, obtaining with this profits. The surplus value, which is the increase in the value of the goods, through it is generated profitability both to depositors and the same bank. The financial entities fulfill the mission of being financial intermediaries, it is a purely commercial function, where the bidder, those who sell goods and / or services, come in contact with the plaintiffs who are those who are willing to buy the products of the bidder. Then the intermediary plays an important role in an active market, because the savings are channeled in the direction of the investment and the capital of the investors is profitable.

Types of banks

Types of banks

The set of banks creates what is known as Banking, they are segmented and have an ability to act that varies according to the sector with which they work. On the other hand, it also receives a classification according to who they belong.

  • Retail banking: they are the ones that are in charge of the operations with investors and savers of the small and medium enterprises and of natural persons. This bank is divided into:
  • Private banking: What is the universal management of a person’s assets.
  • Private banking or commercial bank: It is responsible for serving the daily operations of the public.
  • Wholesale Banking: Your destination is aimed at large operations of companies or organizations.
  • Investment banking: This segment seeks to obtain funds to make investments.
  • Bank of companies: It is for the financial sector, specialized in financing projects or companies.

On the other hand, we have the division of the banks according to who they belong to. Public banks are those whose capital is the State, private banks are those that have their own autonomy and the mixed bank, are the two capitals, private and public, are constituted for this type of bank.

The importance of financial institutions lies as such in the ongoing maintenance of trade within and outside the country, thanks to them can be invested in profitable projects that can ensure, not only profit, but jobs. On the other hand, they are very important entities for the States since they can offer liquidity in times of crisis, the need to have a country with a good economy ensures financial stability to the inhabitants that may belong to it. It not only serves for companies, but also generates loans and credits to individuals.