Banking Finance Definition

Banking finance definition gives us information about the definition of banking and the definition of finance. Banking refers to that process in which a bank which is a commercial or government institution offers financial services that include lending money, collection of deposits, issue of currencies and debit cards, and transaction processing etc.
The majority of banks works as profit-seeking enterprises, however, a few government banks work as non-profit organizations. Central banks function as government agencies and they regulate the interest rates and circulation of money in the total economy.

The activities of banks can usually be categorized into the following types :
Receiving deposits from the customers and issue of current or checking accounts and savings accounts to businesses and individuals
Providing financial consultation services to individuals and businesses
Providing loans to businesses and individuals
Encashment of checks
Facilitation of monetary transactions, for example cashiers checks and wire transfers
Issue of ATM cards, credit cards, and debit cards
Offering safe deposit vaults for keeping valuables
Encashment and distribution of bank rolls
Retirement & pension planning

Banks can be widely categorized into two types:

Retail banks: These include
Commercial banks
Postal savings banks
Private banks
Community banks
Community development banks
Savings banks
Building societies
Offshore banks

Retail banking directly deals with small businesses and individuals, commercial banking, corporate banking services to important commercial organizations, and offering services to mid-market businesses.

Investment banks: The investment banks function as underwriters of stock and bond issues and also provide a number of related services. Examples of investment banks are merchant banks and venture capital firms. As a whole, investment banking deals with capital markets.

The financial transactions of a bank are carried out through a number of measures:
Through branches
Through ATMs (automated tellering machine)
Telephone banking
Online banking
Through mail services
Finance deals with efficient allocation and distribution of resources by commercial entities, individuals, as well as other establishments over time taking into consideration the associated risks.

The term called finance can include any of the following areas:
The process of managing money
The study of money and other types of assets
Managing and controlling those assets
Identifying and handling project risks

If the term finance is used as a verb, it denotes provision of funds for individuals for buying cars or houses and businesses.

The function of finance is to apply a group of techniques which the corporate entities and individuals implement for managing their financial activities, specifically the margin of income and expenditure as well as investment risks.

Finance can be widely categorized into the following types:
Personal finance
Business finance
Public finance

The major sources of financing include:
Savings
Loan or credit
Taxes
Donations
Subsidies
Grants

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Last Updated on : 23rd June 2015