What Is the Definition of Banking

Investment banking offers similar services for small businesses. They offer mezzanine financing, bridge financing and business lending products. Acquisition The process of buying or acquiring an asset or an entire business. Activity This is the main banking activity of an institution. For example, the main activity of government member banks, non-member banks and domestic banks (all of which are commercial banks) is commercial banking. Departure date This is a report date or transaction date. Bank Insurance Fund (BIF) see Insurance The fund that provides deposit insurance to commercial banks. It is administered by the Federal Deposit Insurance Corporation (FDIC). Bank Holding Companies Performance Report (BHCPR) An analytical tool prepared by the Federal Reserve System for regulatory purposes, including on-site audits and inspections, offsite monitoring and surveillance, and analysis of requests to the Federal Reserve regarding mergers, acquisitions, and other matters. BHCPRs are designed to assist analysts and auditors in determining the financial position and performance of a bank holding company based on financial statements, benchmarks, trend analysis and percentiles relative to its peers. In recent years, the banking sector has become very complicated.

Banks have ventured into sophisticated investment and insurance products. This level of sophistication led to the 2007 bank credit crisis. Sharia banking complies with the Islamic prohibition of interest. In addition, Islamic banks do not lend to liquor and gambling companies. Borrowers share with the lender instead of paying interest. For this reason, Islamic banks avoided the risky asset classes responsible for the 2008 financial crisis. Internet banking offers these services via the World Wide Web. The sector is also known as e-banking, online banking and net banking. Most other banks now offer online services. There are many online-only banks. Since they don`t have stores, they can pass on the cost savings to the consumer. Banks are the institutions that can create credit, i.e.

the creation of additional money for the loan Thus, credit creation is the unique feature of the bank. These sample phrases are automatically selected from various online information sources to reflect the current use of the word “bank”. The views expressed in the examples do not represent the views of Merriam-Webster or its editors. Send us your feedback. Banks can be classified into certain categories depending on the type of activity they do. Commercial banks provide services to individuals and businesses. Retail banking provides credit, deposit and money management services to individuals and families. Credit unions provide banking services but, unlike banks, they are not-for-profit institutions created and managed by their members or customers. Credit unions provide day-to-day banking services to their customers, usually referred to as members.

Banking can be defined as the activity of accepting and protecting money belonging to other people and businesses, and then lending that money for a profit. However, over time, banking activities have expanded and various other services are now also offered by banks. Nowadays, banking services include issuing debit and credit cards, security of valuables, safes, ATMs, and online money transfers across the country/world. Since all commercial banking operations are carried out with the aim of making a profit, it is considered a commercial institution. JPMorgan Chase and Bank of America are examples of commercial banks, although both also have large retail banking divisions. You should consider whether you want to have both business and personal accounts with the same bank, or if you want them to be in separate banks. A retail bank that provides basic banking services to customers is best suited for day-to-day banking. You can choose a traditional bank that has a physical building, or an online bank if you don`t want or need to visit a bank branch. You might consider a credit union, which is a not-for-profit organization that caters to people with a common employer, union or professional interest.

Become a Vskills certified commercial banker. Get to know the “Bank Definition” module. Try the free practice test! Branch An office of an institution that is physically separate from its home office, but offers the same types of deposits, loans and other services as those provided in the home office. Charter (Chartering Authority) A state or federal authority that issues charters to new custodian banks. In the case of state-chartered institutions, the charter authority is usually the state-owned banking department; for national banks, this is the OCC; and for federal savings banks, it is the Office of Thrift Supervision. Closed bank When the statutes of an institution are closed and there is no successor institution. Bank failure (failure) The closure of a financial institution by its chartering authority, which repeals the institution`s charter and deprives it of its legal capacity because the institution is insolvent, severely undercapitalized or unable to cover deposit outflows. FDIC Certificate Number Unique number assigned by the FDIC to identify institutions and issue certificates of insurance. Federal Financial Institutions Examination Council (FFIEC) An inter-institutional body composed of representatives of the five regulators responsible for U.S. custodian banks.