how has the modern banking system transformed money and the ease for affordable credit?
Answers
Explanation:
What Is the History of Banking?
Banking has been around since the first currencies were minted—perhaps even before that, in some form or another. Currency, in particular coins, grew out of taxation. In the early days of ancient empires, annual taxation on one pig may have been reasonable, but as empires expanded, this type of payment became less desirable.
KEY TAKEAWAYS
Banking institutions were created out of a need to satisfy the market to provide loans to the public. As economies grew banks allowed the general public to increase their credit and make larger purchases.
Historically temples were considered the earliest forms of banks as they were occupied by priests and became a haven for the wealthy.
The earliest Roman laws allowed for taking over of land in lieu of loan payments that were owed between debtors and creditors.
A well-known economist, Adam Smith during the 18th century theorized that a self-regulated economy would allow for markets to reach equilibrium. This was known as the invisible hand, documented in The Theory of Moral Sentiments.
In more modern history, the panic of 1907 was a trigger of two brokerage firms that had become bankrupt causing a recession later that year when liquidity was an issue to the American cities. This led to the creation of the Federal Reserve Bank.
The second World War generated business and work within the U.S. helping lift the economy from its ebbs.
Understanding Banking History
The history of banking began when empires needed a way to pay for foreign goods and services, with something that could be exchanged more easily. Coins of varying sizes and metals served in the place of fragile, impermanent paper bills.
Explanation:
Now fast forward a decade, banks have rebuilt their balance sheets, have tightened lending standards, and have diversified their revenue streams. The operations inside of a bank have also become much more efficient. Banks have closed branches, lowered headcount, while continuing to invest into technology.