Reviewing the importance of Commercial banks

by | Mar 22, 2012 | Business And Finance

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Deposits are the primary liability of a commercial bank and bonds/loans are considered as primary assets. U.S. Banking Act of 1971 states that a commercial bank is a financial institution which provides demand deposits and is responsible for originating loans. Hence, we can say that a mutual fund is not a commercial bank, since it is not responsible for originating loans. A finance company also cannot be considered a commercial bank, as it fails to offer demand deposits. Commercial banking in Wichita, KS is totally different from other types of banking services like investment and retail.

The activities and the procedure involved in commercial banks are totally different banking solutions. The process has many phases including underwriting, advising corporate turnovers and market acquisitions, mediating transactions between security issuer and investors. Commercial banks also act as brokers for their institutional clientele. The role of commercial banking in Wichita, KS has a broader and a bigger scope.

As the name suggests, commercial banks aid the industrial and commercial sector. Commercial banks are generally owned by companies involved in bank holding and by private investors. However, the majority ownership of commercial banks lies in the hands of bank holding companies. The objective of a commercial bank is to generate profits. Thus, a commercial bank plays the role of a financing company which is associated with banking sector.

Commercial banking helps the overall banking systems and also plays a significant role for its investors and companies. The idea is to provide legal loans on securities and earn interests over it. Although the existence of commercial banks dates back to centuries, the core idea was only introduced after the First World War. Commercial banking in Wichita, KS helps many unorganized businesses in this area to develop and grow faster than expected. People are starting to realize the importance of commercial banking and thus do not hesitate in trusting to its services.

Apart from a stream of banking services, most of the commercial banking institutions have entered into micro finance markets for a broader reach. Commercial banks usually provide soft loans which are basically based on a company’s character than its collateral. This evolution has pushed small scale sector to make best possible use of commercial banking in Wichita, KS. By fulfilling all the major requirements of modern economic system, commercial banking has established itself as a primary piece of modern business puzzle.


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