Banking system. Types of banks
Services provided by commercial banks
For the general public and many businesses, banking services are provided by the Commercial banks. These banks offer a wide range of banking services, e.g.,
- accepting and holding deposits
- managing customers' accounts
- providing credit cards
- arranging loans
- arranging mortgages
- insurance.
Customers can open current (or cheque) accounts, savings and deposit accounts. Commercial banks issue:
- Letters of credit
- collect payments
- discount bills of exchange
- handle foreign currency transactions
- trade in securities.
They act as profit-making companies as they sell their services. They make a profit from the difference (known as a spread or a margin) between the interest rates they pay to lenders or depositors and those they charge to borrowers. Commercial banks invest into public and corporate securities.
Services provided by merchant banks
Services provided by investment banks
Opening an account
Types of accounts
The central bank and its functions
The central bank looks after the government's finance and monetary policy and also acts as banker to other banks. It has 4 main functions.
1. The first one is to implement monetary policy. There are roughly 3 ways to do it. First is setting interest rate ceilings and floors, which means limiting the fluctuations of the interest rate. The second way to implement monetary policy is simply printing money, or destroying it – coins, banknotes. The third is buying and selling government bonds to and from commercial banks.
2. The second one is exchange rate supervision, mainly for floating exchange rates. But even for a fixed exchange rate the central bank still has to make sure that it has enough reserves to counteract any upswing or downswing of this exchange rate.
3. The third main task is commercial banking supervision – that is making sure that the commercial banks have enough liquidity, for instance, to avoid any bank run. The bank run is a sort of panic, a situation in which investors or customers run to the bank and take their money out because they realize or they think they realize that their bank is not trustworthy any more.
4. The fourth main task of the central bank would be to act as a lender of last resort in case one of these commercial banks goes bankrupt and the investors have to get back their money.
In some countries the central bank is independent from the government, in others it is controlled by the government.
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Banking system in Ukraine
Types of loans and its purposes.
It isn't always possible to run a business on the working capital. There may not be enough in the bank to do everything the company needs to, to grow and expand. For Instance, its essential to raise money to start a business, and it may well need a large sum to pay for major developments, or cover financial gaps.
When a business raises finance it could be short-term, to:
- cover temporary gaps, when customers pay late or a big order means they have to buy lots of raw materials
• get through seasonal periods, in a business where sales go up and down
• survive a temporary problem or set-back (like a firm going broke when it owes you money), or take advantage of a special opportunity (like a special discount for buying more than the usual amount of raw materials}.
Or It might be medium-term, to:
• pay for equipment that has a life of two to five years (like computers and vehicles);
- change strategy - such as opening up new markets in Europe or the USA, instead of concentrating on the UK.
If It's long-term it’s likely to be to:
• provide the start-up capital that will see the business through it's whole life
• buy major assets (like buildings)
- pay for major expansion plans (such as taking over another business).
When it’s long-term loan it can be repaid in more than one year period.
Brand and product: differences. Give examples of brands.
In marketing, product is anything that can be offered to the market that may satisfy the need, want, and demand of a certain individual or market. It is also called as goods or service. Product is more than just a material object. It is also an inclusive package of benefits or satisfactions that the consumer or buyer may achieve upon purchase or usage. A product is the total amount of all physical, psychological, symbolic, and service attributes. Several examples of products are the following: hamburger, fries, and soft drink.
On the other hand, brand is a symbolic manifestation of all the information connected with a company, product, or service. A brand is typically composed of a name, logo, and other visual elements such as images, colors, and icons. It is believe that a brand puts an impression to the consumer on what to expect to the product or service being offered. In other application, brand may be referred as a trademark, which is legally an appropriate term. In summary, a 'brand' is a symbol of a product (Coca-Cola), service (Eurostar trains), company (Campari) or even an individual (Michael Jordan) to identify what it is. Specifically, an example of brand is McDonald's fast food restaurant, which carries the world's most popular Golden Arches.
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