Role of Banks in the Economic Development of a Country | CMA Foundation Notes A bank plays an important part in a country's economic development. In today's economic world, the banking system connects various marketplaces. Depositors' savings and collections are lent to clients in need of funds. This procedure allows money to flow from one sector of the economy to another. As a result, banks make commerce easier. The following are characteristics of a sound banking system in economics : Adequate Liquidity : Having a specific amount of liquidity is one of the most important aspects of sound banking. A bank allows its customers to deposit money in a variety of methods, including time deposits, current and savings account deposits, and non-resident ordinary accounts, depending on their preferences. As a result, banks must have sufficient cash on hand to accommodate depositor withdrawal requests. If a bank fails to meet these requirements, it is deemed insolvent. Banking Ser...
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