What Is The Role Of Commercial Banks In Recession?


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The functions of commercial banks is determined by its nature, mainly four basic functions:
(1) credit inter-mediation.
Credit intermediaries, commercial banks the most basic business activities can reflect the characteristics of its functions. The functions of the essence of business through the bank's liabilities, the society focused on a variety of idle money in the bank to further business through the assets and put it toward economic sectors; commercial banks as lenders of capital and currency The borrower or on behalf of intermediaries, to achieve capital inter-mediation, and attract capital from the cost and payment of loan interest income, the difference in investment income, for interest income, the formation of their profits. Commercial banks to become the sale of "capital goods" and "big businessmen." Commercial banks through the credit intermediary function between the capital surplus and shortage of Fusion, does not change the ownership of monetary capital to change only the right to use monetary capital.
(2) the payment inter-mediation.
In addition to commercial banks as credit intermediaries, other than monetary capital inter-mediation, but also the implementation of the currency management business functions. Deposit in the account by the transfer agent clients paid the deposit, based on cash payment for customers such as businesses, organizations and individuals currency custodian, the cashier and pay the agents. Commercial banks as the center, forming the economic process without beginning or end of the payment chain and debt payment.
(3) credit creation function.
Commercial banks in the credit inter-mediation and payments based on the intermediary functions, resulting in credit creation function. Commercial banks are able to absorb all kinds of bank deposits, and deposits with its absorption of a variety of loans, circulation and transfer of the check settled on the basis of the loan into another deposit, this deposit in cash or incomplete without mentioning the current based on the commercial banks to increase sources of funding, the last in the entire banking system, the formation of several times the original deposit of the derived deposits, long time, the various financial institutions, commercial banks are only able to absorb demand deposits, check-able deposits account of the agency, on this basis had a transfer and check the flow of commercial banks. Activities through its own credit creation and contraction in demand deposits, while demand deposits constitute a loan-to-market supply is the main part, therefore, commercial banks can put their own debt as currency in circulation, with the credit creation function.
(4) financial service functions.
With economic development, industrial and commercial enterprises of the business operating environment becomes increasingly complex, competition among banks has become increasingly intense business of the bank as a wide range of contacts, information on more well-informed, especially a computer in the banking business extensive use of Shi Qi provide customers with the conditions of information services, consulting services, enterprise "decision support" services came into being, business and professional development of production and circulation, it is requested that many of the original business enterprises themselves the money transferred to bank their behalf, such as payroll, agency pay for other expenses. Personal consumption also increased from mere money and transactions, the development of settlement for the transfer. Modern social life, in many ways a commercial bank financial services requirements. Intense competition in business under the authority of the commercial banks continue to develop services, through the development of the financial services business and further promote the expansion of business assets and liabilities, and to balance business and financial services together and explore new business areas. In modern economic life, financial services has become an important function of commercial banks.
(5) the functions of regulating the economy
Regulating economy refers to commercial banks through their credit inter-mediation, transfers of funds shortage in all sectors of society, while the central bank monetary policy and macroeconomic policies of other countries under the guidance of economic structure, the consumption rate of investment, industrial structure and so on adjustment. In addition, commercial banks in the international market through its financing activities also can adjust their balance of payments.
Commercial banks because of its wide range of functions, making it the impact of the socio-economic activities is very significant in the entire financial system and the national economy, among the special and important position. With the development of market economy and integrated development of the global economy, the current functions of commercial banks have highlighted the diverse trends.

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