[Economics]
The emergence of banks and bakings is associated with a need for intermediary market activities of exchange and sharing of values, which served the function of money in exchange and trading operations. The need for the establishment of banking amplified simultaneously with the development and expansion of trade in the world. The emergence of money as an absolutely unique commodity converted the primitive barter mechanism into circulation of goods trough purchases and sales.
In ancient Greece the bankers were called “trapezyty”. Most of them originally was considered to be either foreigners or freed slaves, who later became citizens. The remarkable peculiarity of conducting of bank operations at that time was a low level of their legal registration. In the court really significant role played reputation of bankers, as well as the confession of witnesses. “Trapesyty” performed the exchange of coins, taking deposits, conducted non-cash operations and payments, gave mortgages or loans secured by movable property. The approximate rate of loan varied from 10 to 20 percent.
The state does not interfere in the activity of these “trapesyty”, barely regulated the rate of interest and did not use the services of private bankers. At that time the function of state banks was carried out mainly by temples. Temples were reliable places to store some kind of valuables. They were responsible for attracting deposits, giving long-term loans and complying operations with state money. Thieves were frightened of God, and with the respect to the altar, did not rob temples. Contributions, inviolability of which was guaranteed by the respectful attitude to religion, turned famous Greek temples (such as Delphi, Delian, Samos, Ephesus and other) into original banks. For example, in the temple of Artemis at Ephesus were accumulated deposits from all Asia Minor coast and on the temple of Apollo at Delphi there were concentrated free money of all European Greece.
The first bankers realized that wealth accumulated can be given for temporary use or use the money wisely, for instance, start their own business, open on commercial basis artisan enterprises and benefit from entrepreneurship – receive additional cash. At first, they started to offer secured loans. The mortgage in this case was considered to be ships and good, in some situations – houses, building, valuable and even people (slaves). So as you can understand, first trade operations of raising the capital and then placing it in order to earn some cash were launched.
Ancient Rome borrowed banking from Greece. Bankers exchanged and checked coins, received loans, gave credits, implemented non-cash operations as well. However, the state was actively interfering into their activity. Bank operations and cash payments in Ancient Rome were carried out by “mensariys”.
The characteristic features of doing banking in ancient Rome were detailed legal regulation of banking operations and high level of organization of the paperwork. It seems that Roman bankers were the first who added to the economic science terms such as “debit” and “credit”, used “income-and-expenditure ledger” and General Ledger, providing them as an evidence in the court.
Rapid trade was considered to be the main factor in the revival of banking in the IX century. Bank operations were primarily conducted by commercial houses which were formed by the cities of northern Italy. They did not only serve their national market, but also provided loans to kings and feudal lords of all European countries.
Predecessors of banks in Italy were medieval money changers – the representatives of monetary capital; they accepted cash deposits from merchants and specialized in the money exchange in different cities and countries. Over time, the money changers used these deposits and their own money to obtain loans and to receive interests which meant that money changers turned in bankers.
In XVI-XVII centuries merchant guilds in some cities (Venice, Genoa, Amsterdam, Hamburg, Nuremberg) created special banks for non-cash payments between its customers. These banks conducted transactions between clients in special currency, expressed in weight of a certain quantity of precious metal. The banks used their free cash for providing a loan to the state, cities or privileged foreign trade companies.
In England, the banking system was established in XVI century. Moreover, first bankers came from goldsmiths or merchants. The Polish-Lithuanian state and later the Commonwealth in the modern sense of the term had no banking system at all. However, credit relations which were the necessary basis for economic development in the XIV-XV centuries had already been on the highest level. Separately, there were Christian and Jewish banking.
In Poland in the XVI century, along with the economy, developed centralized credit. Lombard operations were mostly performed by Jewish financiers who often had to deal with the Christian population. On Poland lands credit relations were decentralized. However, in rural areas, where the loan office provided to the community needs with money and grain, they evolved very active. In large cities large capital was operated by the general the banks, which were established by the European community. XVII century is a period of concentration of banking capital in Poland and its penetration into the international economy.
In the XX century there were two remarkable events:
Commercial banks faced the Great Depression in 1929, when depositors started to withdraw their money from banks, market froze and fell. As a result, banks lost billions of dollars in assets and gone bankrupt;
The establishment of the World Bank and International Monetary Fund in 1944. These organizations are responsible for giving loans to developing countries, promote sustainable economic growth, as well as security of financial stability.
In XXI century we can observe how financial innovations advanced extremely. For example, the popularization of internet banking (or online banking). Literally, we have gone so far, that there is no need to go to your bank and solve your problems directly there. Modern multifunctional remote servicing of individuals allows you to manage bank accounts 24/7 in real-time from anywhere in the world using the Internet. This online banking service gives the customer a high level of convenience and security. In particular, the system allows customers to remotely perform operations on accounts and cards, transfer money to their country, to open and to replenish deposits, repay loans, pay for utilities and Internet, replenish your mobile phone. All in all, you are free to do everything in your home.
In addition, we can notice a rise of non-banking financial companies. Though they do not have a banking license, they are under the constant surveillance of country’s banking regulations. There are such types of non-banking financial companies: leasing companies, venture capital companies, investment companies, corporate developing companies and others.
Modern banks play a significant role in our society. They:
Transfer money capital from the area of accumulation in the area of usage;
Provide savings of public distribution costs:
Operate the mechanism of distribution and redistribution by spheres and types of activity;
They streamline all processes of circulation of goods and services;
Trough banks, large amount of capital is mobilized for further investments, expansion of production and so on;
Contribute to the further growth of concentration of production and capital.
Nowadays commercial banks have become some kind of “financial supermarkets” offering a wide range of services to businesses and individuals – from currency exchange to lending nation’s industry.
