What are banks


Banking operations, credit institute; Company that, as a commercial bank, creates money and credit-related services by linking the operational factors of production.

1. Economic function: Liquidity equalization within the flow of money opposing the value flow of material goods and services through lot size, deadline and risk transformation.

2. Individual economic functions:
(1) Exchange function: Creation of opportunities for exchanging liquid funds of different shapes and / or quality.
(2) Depot function: Safekeeping of liquid funds for certain periods.
(3) Transport function: Spatial transfer of monetary resources.
(4) Financing function: Temporary transfer of money or credit to third parties.

3. Legal definition: According to Section 1 (1) KWG, credit institutions are all companies that conduct banking business on a commercial basis, or if the scope of these transactions requires business operations to be set up in a commercial manner. If a company provides financial services that are not banking transactions in accordance with Section 1 (1) KWG, it is considered a financial services institution in accordance with Section 1 (2) KWG. Banks can also be in public hands (public credit institutions). Credit institutions are: credit banks, savings banks and Landesbanken, cooperative banks (credit cooperative) and central cooperative banks, mortgage banks, installment credit institutions, banks with special tasks and capital investment companies. The Deutsche Bundesbank, insurance companies and pawnbrokers are not commercial banks.

See also banking management.