Page 16 - Book4E

A bank is a place that will lend you money if you can prove that you don't need it.
—Bob Hope
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bank makes allows individuals, businesses, and governments to borrow money to finance investments and activities they would miss out on if the money wasn’t readily available.
Interest on loans is still a major source of income for banks today. Short-term loans made to borrowers with the best credit standing are made at prime interest. Prime interest is the term used for the interest
rate banks charge their best customers. Your credit standing must be excellent to qualify for this rate.
Early in the 1900s, short-term loans to commercial undertakings were just about the only type of loan banks were will- ing to give. Bankers were very cautious about whom they loaned money to and
how long they loaned it for. They wanted to be sure they always had enough cash available in case an unexpectedly high number of deposi- tors wanted to make withdrawals. Loans were usually for 30 to 60 days. These loans were mostly used by merchants who needed to pay suppliers for goods ordered. Once the goods were sold to consumers, the merchants would repay the loan.
Nowadays, banks grant loans to individuals and to foreign and domestic governments as well as to business enterprises. Loan terms range from 24 hours to several decades, up to 50 years for a home mortgage. In the 1990s, approximately 27 percent of bank loans were granted to business enterprises, 43 percent to real estate, and 19 percent to individual consumers. Generally, the longer the term of the loan or the lower the credit standing of the borrower, the higher the interest rate charged.
Like credit unions, many smaller banks have consolidated with larger banks and the number of commercial banks in the United States went from more than 14,400 at the beginning of the 1980s to fewer than 7000 in late March 2011. The top ten U.S. banks hold $11 of the
History of Banking