Role of Banks

THE UNIVERSITY OF ADELAIDE SCHOOL OF BUSINESS NAME : TRANG THI KIEU HO STUDENT ID : 1613946 CLASS: TUTORIAL 13 (12339) Banks play a central role in the economy, they create and maintain the flow of money between surplus and deficit unit and by this facilitate the process of production, distribution, exchange and consumption of wealth. If there were no bank activities, a large of amount of capital of the economy would be idle. Hence, banking activities are vital for the development of an economy.
Another function of the bank is risk spreading. They transform risky asset ( loans) to less risker liabilities ( deposits). They also conduct maturity transformation or liquidity providing function. Banks pool of short-term deposits and then give out long-term loans. They can do this base on the theory that different investors have different liquidity preferences. Hence, when banks do not work properly, it will affect the whole economy. In conclusion, a strong banking system is very important for an economy.
I think it is necessary to regulate the banking system because lack of regulation can result in some banks taking excessive risks and getting into trouble. A problem in banking system can affect the whole economy. In fact, some economist said that one of the reasons that led to the global financial crisis is the lack of regulation in financial system. Hence it is necessary to have more regulation to keep the banks working properly. Too much regulation, however, will decrease the competition in financial sector, the big will get bigger and the small who cannot compete will not be able to survive.

Competition between banks forces them to keep the interest margin low to compete. It also helps banks to have incentives to create innovation to work better and make more profit. This will bring much benefit to investors and borrowers. For all of these reasons, I think that we should have enough regulation to keep the banks working properly and avoid another crisis but not strict regulation so that not to decrease competition in financial system.

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more