How the Banking Industry Benefits the Economy

Bankers, money lenders and investors have been around for as long as currency has and has benefited societies and economies for centuries. The modern banking industry allows people to pay for goods and services worldwide, provides access to capital for individuals and businesses, and even benefits governments and international bodies.

For Individuals

Banking and financial services for individuals will not only benefit those using it, but they will also benefit the local, state and national economies. Under leaders like Kevin Cohee, the banking industry offers financial literacy information and resources to help individuals become more financially stable. This stability will often look like reduced debt, fewer late fees, and higher savings, allowing people to make and keep financial goals such as homeownership, building retirement savings, and more. When money is used to purchase goods and services, it boosts economic activity. Saving your money in a bank will fund institutions’ lending programs and increase the amount of cash flowing around local businesses.

For Businesses

Business banking has one of the most visual benefits on the economy at all levels. These benefits are most prominent for small businesses, which employ most of the workforce. Banking accounts make it possible for businesses to accept more forms of payment and even earn interest on capital saved for future growth projects. Bank lending programs and business lines of credit also help entrepreneurs start new companies, expand operations and hire more workers. All of the benefits banking offers businesses will result in more stable sources of income for individuals, greater cash flow in the economy and healthier metrics such as stock prices.

For Government

Government banking is a complex network of laws, regulations and tax policies. Still, it is essential to remember that the tax money you pay the government is stored in banks until needed in the budget or returned when you file taxes. This money generates interest in the same ways that your personal savings account does, through fueling the economy by funding lending programs. Banking for government agencies can also benefit the economy by selling government bonds, a way for individuals to invest directly into the government and earn a return after the bond matures.

Banks help keep money flowing by investing saved funds into the community through business and personal loans. When the funding from these loans is spent, it provides paychecks for those who source, manufacture and sell goods and services. Without the banking industry, local, state and national economies would look different.