Commercial Banking

Commercial banking was first introduced in the US inrevenue.
the late 1700's and early 1800's. They were set up withCommercial banks make a great deal of revenue by
a profit motive and were usually structured as a jointtracing their revenue sources to many different
stock company. In the beginning, only a fewfunctions. Modern banking includes functions such as
commercial banks gained charter from their respectiveforeign exchange, payment of interest and granting of
states. The emergence of commercial banks in the USloans. Commercial banks also offer various other
has resulted in the economic growth of the nation asfunctions such as opening savings account, safe
these banks contribute a great deal to the treasury.deposit boxes and trust services.
Commercial banks vary greatly in size from theThe apex bank of the country regulates the rates of
"money center" banks that offer a wide range ofinterest charged by a commercial bank. Although most
traditional and non-traditional services, includingcommercial banks control a tremendous quantum of
international lending to various regions. In the US, thewealth, it is only allowed to hold on to a fraction of it.
number of small financial banks continues to declineThe rest has to be sent out for circulation in the
while the number of bigger ones continues to grow.economy.
Commercial banks receive huge revenues fromIn the US, there are many commercial banks and the
various sources. Their assets and liabilities are typicallyfunctions of these banks are critical to the nation's
managed in a way that the revenue is maximized andeconomy. The activities of these banks in certain
liquidity is maintained. However, the fluctuation in thefunctions such as the interest rate are monitored by
rates of interest all over the world makes itthe apex bank to ensure transparency and secure the
unpredictable for commercial banks to estimate theiroverall interests of the tax-paying citizen.