how banking funds affected the economy??
Answers
Explanation:
Banks also provide liquidity to the economy by funding illiquid assets with liquid liabilities (Diamond and Dybvig 1983). By doing so, banks help savers manage their liquidity risk, while at the same time enabling long-term investment.
Answer:
component of the financial system, banks allocate funds from savers to borrowers in an efficient manner. They provide specialized financial services, which reduce the cost of obtaining information about both savings and borrowing opportunities. These financial services help to make the overall economy more efficient.
Imagine a World Without Banks
One way to answer your question is to imagine, for a moment, a world without banking institutions, and then to ask yourself a few questions. This is not just an academic exercise; many former eastern-block nations began facing this question when they began to create financial markets and develop market-oriented banks and other financial institutions.