Economic environment unit2

1. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Introduction to Basic Economic Theory and Concepts
The Banking Economic Systems
Pricing and Price Mechanism
Inflation
The Government and Economy
Types of Business Organizations
MODULE COVERAGE
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International Trade and Regional Groupings

2. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
The Role of Banks in the Economy
A bank is an establishment authorized by a government to accept deposits, pay
interest, clear checks, make loans, act as an intermediary in financial transactions,
and provide other financial services to its customers. It is a financial institution
that serves as a financial intermediary. The term "bank" may refer to one of
several related types of entities:
• A central bank whose economic role is to provide and control circulation of money
on behalf of a government and acts as its monetary authority by implementing
monetary policy, which regulates the money supply.
• A commercial bank which accepts deposits and pools those funds to provide
credit, either directly by lending, or indirectly by investing through the capital
markets.
Within the global financial markets, these institutions connect market participants
with capital deficits (borrowers) to market participants with capital surpluses
(investors and lenders) by transferring funds from those parties who have surplus
funds to invest (financial assets) to those parties who borrow funds to invest in
real assets.
Commercial banks also transfer funds nationally and internationally,, thereby
facilitation trade which is key to the functioning of the economy
•
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3. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
A savings bank or savings and
loan companies (S&L). These
provide savings facilities for
persons who are interested in
growing their savings, usually
lower income people.
Development bank, which
lends money to people who
have business start-up or
expansion ideas but need
additional capital
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