Banks Keep the Economy Churning On a grander scale, banks offer much more than personal convenience. They help an economy function efficiently. In fact, weak and unreliable banking infrastructure is a common obstacle for developing countries.  Banks lie at the heart of financial markets. They allocate funds from savers to borrowers.
When you deposit your savings in your bank account, the bank will put it to use. The bank lends it to the individuals and organizations that need the money. When money exchanges hands for goods or services, it boosts economic activity. Virtuous Cycle For example, when a homebuyer uses a mortgage to buy a house, or when a company uses loans from the bank to invest in itself (buying equipment, hiring new workers, etc.), the money trail doesn't just stop there. The receiver of the money either spends it on other goods and services, or deposits the funds in the bank for the time being until they need to spend it. In the first scenario, the cash goes right back into the economy. In the second scenario, the bank lends out the money. No matter what, on and on the money will cycle through the economy. Each time money changes hands, it creates wealth and spending power for the receiver, and fuels economic growth. Think about how many transactions take place in the U.S. in just one day, ranging from mere cents to millions and billions of dollars. Imagine if every payment had to be made in cash, how cumbersome and risky this would be. Every time you are able to write a check or pay by card, your bank account eventually provides the money. Vital Financial Services Banks also provide services that keep the economic wheel churning. Just a few examples: They provide temporary credit to help large financial transactions go through, they help companies manage their money and investments, and they help governments and large companies issue bonds and stock shares in capital markets. The bottom line is that banks are vital to a well-functioning economy. They make the economy run much smoother. Look no further than the marijuana industry as an example of what would happen if there are no banks. Even though there is high demand and more and more states are legalizing pot, vendors have limited access to financing and banking services, so it's largely a cash-only industry, which makes conducting business more difficult than usual. Which brings me to the cash crunch in the marijuana industry. Many pot companies aren't able to get loans, which has weighed on cannabis stocks. But new laws are going into effect to expedite lending to marijuana outfits, which should in turn fuel a resurgence in the marijuana sector. For the best pot stocks, click here now. | 
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