THIRD TERM
WEEK TWO
FINANCIAL INSTITUTIONS
Meaning: Financial institution are business organizations which hold money for individual and institution and may borrow from them in order to give loans or make other investment. Financial institute are very important in any economy. They are the main channels through which funds can flow lenders to borrowers.
Types of financial institutions.
Financial institutions may be divided into two broad groups; Banking and non-Banking. The difference between the banking and non-banking financial institutions is that Liabilities of the banking financial institutions are counted as part of the total supply of money while those of the non-banking are excluded from the money supply.
Banking financial institutions include: commercial, merchant, development, savings and central banks. While the non-banking institutions include; insurance companies, hire purchase, companies and building societies.
Banking financial institutions
A bank may be defined as business house where money is received or repaid and where loan or general financial business maybe negotiated and transacted, the origin of banking institutions traced back to the activities of the Goldsmith of London who had safes in which valuable items could be stored. People therefore brought their gold to them for safe keeping, every person who brought their gold to them for safe keeping was issued with a receipt for purpose of identifications, and such a person could use the Goldsmith receipt to transact business. People freely exchange goods for Goldsmith receipts because they are confident that the Goldsmith would repay gold to anyone who took the receipt back to him. For this reason, it was virtually unnecessary to collect the actual gold since mere receipt gave one command over goods and services of equivalent worth.
In the course of time, the Goldsmith discovered that they always have more gold in stock than their costumers collected, they therefore began lending the excess gold to people at some internet. As that turned out to be profitable business the Goldsmith themselves soon began to pay interest on the gold deposited with them so as to encourage more persons to deposit their gold. The more gold they held in deposit, the more they had to lend and the more interest they could earn. The modern bank as a financial institution developed from this arrangement.
Commercial bank: A commercial bank is a joint-stock company engaged in the banking business to receive all kinds of deposit and make loans of generally short-term nature. Such short-term loans are usually required by business men to meet their working capital requirements.
Brief Historical Development of commercial bank in Nigeria
Commercial banks began to operate in Nigeria from the late nineteenth century and their growth since then has been quite impressive. The first commercial bank in Nigerian soil was the African banking corporation, established in 1891. This was followed in 1894 by the Bank of British West Africa and in 1899 by the Bank of Nigeria Limited. In 1912, the bank of Nigeria Limited was taken over by the Bank of British West Africa which became the Standard Bank of Nigeria Limited in1965. Following the indigenization exercise of 1972 and 1977, the standard bank merged to become the first Bank of Nigeria and Barclays bank which came Nigeria in 1917 became the union Bank of Nigeria.
Functions of commercial banks
Commercial banks make up the bulk of the banking financial institutions in any economy. Their main functions are:
Exercise:
THIRD TERM
WEEK TWO
FINANCIAL INSTITUTIONS
Meaning: Financial institution are business organizations which hold money for individual and institution and may borrow from them in order to give loans or make other investment. Financial institute are very important in any economy. They are the main channels through which funds can flow lenders to borrowers.
Types of financial institutions.
Financial institutions may be divided into two broad groups; Banking and non-Banking. The difference between the banking and non-banking financial institutions is that Liabilities of the banking financial institutions are counted as part of the total supply of money while those of the non-banking are excluded from the money supply.
Banking financial institutions include: commercial, merchant, development, savings and central banks. While the non-banking institutions include; insurance companies, hire purchase, companies and building societies.
Banking financial institutions
A bank may be defined as business house where money is received or repaid and where loan or general financial business maybe negotiated and transacted, the origin of banking institutions traced back to the activities of the Goldsmith of London who had safes in which valuable items could be stored. People therefore brought their gold to them for safe keeping, every person who brought their gold to them for safe keeping was issued with a receipt for purpose of identifications, and such a person could use the Goldsmith receipt to transact business. People freely exchange goods for Goldsmith receipts because they are confident that the Goldsmith would repay gold to anyone who took the receipt back to him. For this reason, it was virtually unnecessary to collect the actual gold since mere receipt gave one command over goods and services of equivalent worth.
In the course of time, the Goldsmith discovered that they always have more gold in stock than their costumers collected, they therefore began lending the excess gold to people at some internet. As that turned out to be profitable business the Goldsmith themselves soon began to pay interest on the gold deposited with them so as to encourage more persons to deposit their gold. The more gold they held in deposit, the more they had to lend and the more interest they could earn. The modern bank as a financial institution developed from this arrangement.
Commercial bank: A commercial bank is a joint-stock company engaged in the banking business to receive all kinds of deposit and make loans of generally short-term nature. Such short-term loans are usually required by business men to meet their working capital requirements.
Brief Historical Development of commercial bank in Nigeria
Commercial banks began to operate in Nigeria from the late nineteenth century and their growth since then has been quite impressive. The first commercial bank in Nigerian soil was the African banking corporation, established in 1891. This was followed in 1894 by the Bank of British West Africa and in 1899 by the Bank of Nigeria Limited. In 1912, the bank of Nigeria Limited was taken over by the Bank of British West Africa which became the Standard Bank of Nigeria Limited in1965. Following the indigenization exercise of 1972 and 1977, the standard bank merged to become the first Bank of Nigeria and Barclays bank which came Nigeria in 1917 became the union Bank of Nigeria.
Functions of commercial banks
Commercial banks make up the bulk of the banking financial institutions in any economy. Their main functions are:
Exercise: