Relation between banking and the economy


Banking and the economy are two words which sound like have no relationship, but we know both involves money. From this standpoint, we now have some connections that can define a relationship. Banking provides the liquidity needs for businesses and families to invest for the future. From the bank loans and credit, given to businesses and families, this money is used to invest further and which in turn leads to growth in the economy. This depicts a connection between banking and economy. The economy of a country depends on banking. Banks can also use the funds stored by individuals to invest in other investments, so it also helps in growth of the economy. Without these banking institutes, the economy growth would be fragile. Most countries depend on banking for funds which they use to invest, thus lead to the growth of its economy. Europe’s crisis-hit banks and could topple the entire world economy. This clearly depicts how important banking is to the economy and the relationship that banking and the economy have.