Commercial banks collect deposits from savers and lend these deposits to borrowers. This process of intermediation allows savers to earn interest on their deposits and borrowers to obtain the funds they need to invest in businesses and other productive activities.
Commercial banks also provide other services that can help economic development, such as:
Making payments: Commercial banks facilitate payments by providing checking accounts and other payment services. This makes it easier for businesses to conduct transactions and for consumers to purchase goods and services.
Providing credit: Commercial banks provide loans to businesses and consumers. This helps businesses to expand and create jobs, and it helps consumers to purchase homes and other goods and services.
Investing in the community: Commercial banks invest in the community by making loans to small businesses, providing financial education, and supporting local charities. This helps to create jobs and improve the quality of life in the community.
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