Role of Commercial Banks in Economic Development
Role of Commercial Banks in Economic Development
According to Kent:
“An organization whose principal operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to others for expenditure.”
Various economists have different views about the role of commercial banks in economic development. Schumpeter says, “It is the banking system which serves as a key agent along with the entrepreneur in the process of economic development”. According to Prof. Cameron in his “Banking and Economic Development”, “a banking system may make a positive contribution to economic growth and development.”
Banks plays a vital role in the economic development of a country.
They accumulate the idle savings of the people and make them available for investment. They also create new demand deposits in the process of granting loans and purchasing investment securities. They facilitate trade both inside and outside the country by accepting and discounting of bills of exchange. Banks also increase the mobility of capital. They provide a variety of facilities for remitting a large amount of money from one place to another by the transfer of a mere slip of paper.
In a country like Afghanistan which is still in the initial stages of economic development. A well organized banking system is the need of the day. There is acute shortage of capital in Afghanistan.
The banks can play an important role in promoting capital formation, in controlling speculation in maintaining a balance between requirements and availabilities and in directing physical resources into desired channels.
Commercial banks play an important and active role in the economic development of a country, if the banking system in a country is effective, efficient and disciplined; it brings about a rapid growth in the various sectors of the economy. The use of online banking is now on the increase. It has brought revolution in banking industry. The
According to Kent:
“An organization whose principal operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to others for expenditure.”
Various economists have different views about the role of commercial banks in economic development. Schumpeter says, “It is the banking system which serves as a key agent along with the entrepreneur in the process of economic development”. According to Prof. Cameron in his “Banking and Economic Development”, “a banking system may make a positive contribution to economic growth and development.”
Banks plays a vital role in the economic development of a country.
They accumulate the idle savings of the people and make them available for investment. They also create new demand deposits in the process of granting loans and purchasing investment securities. They facilitate trade both inside and outside the country by accepting and discounting of bills of exchange. Banks also increase the mobility of capital. They provide a variety of facilities for remitting a large amount of money from one place to another by the transfer of a mere slip of paper.
In a country like Afghanistan which is still in the initial stages of economic development. A well organized banking system is the need of the day. There is acute shortage of capital in Afghanistan.
The banks can play an important role in promoting capital formation, in controlling speculation in maintaining a balance between requirements and availabilities and in directing physical resources into desired channels.
Commercial banks play an important and active role in the economic development of a country, if the banking system in a country is effective, efficient and disciplined; it brings about a rapid growth in the various sectors of the economy. The use of online banking is now on the increase. It has brought revolution in banking industry. The