Banks evolved from the concept of a royal treasure room to a strong room where hired guards watched over valuables. Keeping assets safe was the principal cause.
Banking as a concept didn't get wide spread action until the concept of interest payments on loans (and social conventions against charging interest) became mainstream. This is the foundational idea behind modern finance.
The practice of taking deposits and lending money is the bread and butter business of banking. It's estimated that the number of bank loans (including credit card debt) exceeds the number of deposit accounts by a factor of three worldwide.
The practice of charging interest is what makes banks work. A lot of people's first encounter with a bank is with a savings deposit book; their second is with a some sort of loan, and this proves to be the tie that binds.
I took my first bank loan when I wanted to buy a car. It was an auto bank loan or a bank loan given for the specific purpose of buying a vehicle. My next bank loan was taken when I wanted to buy a condo.
Nobody in the present day and age (unless they are born to money) has enough money lying around to make big ticket purchases like a condo or house, without having to resort to a bank loan.
A typical bank loan for a home runs 15 to 30 years, and most people will end up accruing equity in a home, paying interest on it, and otherwise, becoming home owners in fee simple.
Other bank loans are issued for various reasons, from personal loans to buy items that matter to you, all the way to lines of credit tied to an asset. Personal loans are usually used for things like marriages, emergencies, and major repaired. Secured loans are usually tied to improving the value of the asset that's securing the loan.
And then of course, there are student bank loans. There are bank loans that will help you buy a car. And again, there are bank loans that will help you buy computers, washing machines and other consumer goods.
Yes, even a credit card is a bank loan, and is one of the reasons why our society is so mired in debt. This trend for unsecured debt has shown up in other ways with debt consolidation loans - taking out a loan to pay off other loans at higher interest rates or higher monthly payments is a thriving business.
All of these consumer bank loans, mortgages included, are nothing compared to the banking transactions build on inter-business lending.
Whether it is a small business operated out of the home or a large business that needs millions of dollars in order to tide over a cash flow problem or to acquire assets, banks loans issued to businesses far outstrip individual bank loans.
If those loans dry up, the repercussions are terrifying. Business worldwide would collapseand given the way the banking system is run, it may yet happen. Which may make the original meaning of the word 'bank' the most important one of all.
Banking as a concept didn't get wide spread action until the concept of interest payments on loans (and social conventions against charging interest) became mainstream. This is the foundational idea behind modern finance.
The practice of taking deposits and lending money is the bread and butter business of banking. It's estimated that the number of bank loans (including credit card debt) exceeds the number of deposit accounts by a factor of three worldwide.
The practice of charging interest is what makes banks work. A lot of people's first encounter with a bank is with a savings deposit book; their second is with a some sort of loan, and this proves to be the tie that binds.
I took my first bank loan when I wanted to buy a car. It was an auto bank loan or a bank loan given for the specific purpose of buying a vehicle. My next bank loan was taken when I wanted to buy a condo.
Nobody in the present day and age (unless they are born to money) has enough money lying around to make big ticket purchases like a condo or house, without having to resort to a bank loan.
A typical bank loan for a home runs 15 to 30 years, and most people will end up accruing equity in a home, paying interest on it, and otherwise, becoming home owners in fee simple.
Other bank loans are issued for various reasons, from personal loans to buy items that matter to you, all the way to lines of credit tied to an asset. Personal loans are usually used for things like marriages, emergencies, and major repaired. Secured loans are usually tied to improving the value of the asset that's securing the loan.
And then of course, there are student bank loans. There are bank loans that will help you buy a car. And again, there are bank loans that will help you buy computers, washing machines and other consumer goods.
Yes, even a credit card is a bank loan, and is one of the reasons why our society is so mired in debt. This trend for unsecured debt has shown up in other ways with debt consolidation loans - taking out a loan to pay off other loans at higher interest rates or higher monthly payments is a thriving business.
All of these consumer bank loans, mortgages included, are nothing compared to the banking transactions build on inter-business lending.
Whether it is a small business operated out of the home or a large business that needs millions of dollars in order to tide over a cash flow problem or to acquire assets, banks loans issued to businesses far outstrip individual bank loans.
If those loans dry up, the repercussions are terrifying. Business worldwide would collapseand given the way the banking system is run, it may yet happen. Which may make the original meaning of the word 'bank' the most important one of all.
About the Author:
You'll never have to worry about California Hard Money again! Visit us on the web at San Diego Hard Money to learn more.
Aucun commentaire:
Enregistrer un commentaire