The role of commercial banking in our economy

The role of commercial banking in our economy

Merchant banks found their origin in early periods in the country of Italy from Italian merchants. The core function of merchant banking services includes providing financial advice and services to both corporate and individuals. These banks act as a kind of intermediary between the issuers of capital and the buyers of the securities. These securities are issued by various companies in the stock markets to raise funds.

The need for commercial banking services

The economy of the country is often affected by various unpredictable conditions like inflation, unemployment, stagnation, etc. The need to maintain stable growth is necessary for corporations and individuals, which is only possible with a long-term strategy and financial capabilities. Commercial banking services provide solutions and financial options.

These banks provide advisory services to customers based on a certain fee. They also provide other financial services to mergers and acquisitions. It is the only financial institution that invests its capital in the client’s company. It acts as an intermediary between those who own capital and those who need capital.

To help their customers with a range of financial options, merchant banking services operate in a number of countries around the world. In this way, clients have the opportunity to explore different financial options to ensure better growth.

Functions of commercial banking services

These banks have a number of functions and some of the most important ones include:

  • Fundraising: one of the primary functions of this banker involves helping the client’s company raise funds from the markets. Banks help manage the supply of equity and debt. Additionally, this feature includes underwriting support, issue pricing and marketing, stock exchange listing, allotment and refund, offer document registration, etc.
  • Offers consulting services: these banks also offer advisory services to their customers for a suggested fee.
  • Security Distribution: the functions of these banking services also include distribution of various types of securities such as fixed deposits, equity shares, mutual fund products, commercial paper and debt instruments.
  • Help in projects: these banks also assist in the projects undertaken by the clients by helping them visualize the project concept. The feasibility of the project is also analyzed by these banks. Project reporting support is also provided to clients.
  • Full financial recovery: merchant banking services provide better financial options and solutions to customers. They help clients raise funds through cheaper resources. With the help of other financial institutions, these banks also help to revive the sick units of the clients’ companies.
  • Offer advice on risk management: another important function performed by these banks involves providing timely advice on risk management. A merchant banker provides advice on various strategies adopted by clients.

Today, merchant banking services provide a number of other services such as loan syndication, credit underwriting, M&A advisory, portfolio management, etc. They also assist companies with short-term liquidity. In short, these banking services are indispensable as they help individuals and corporations to expand their business ventures.

#role #commercial #banking #economy

Leave a Comment

Your email address will not be published. Required fields are marked *