The process of creating new, reorganizing existing banks is underway, banking associations, unions are developing their activities, banks have their own chase routing number and much more. At the same time, it should be emphasized that a mechanical change in the structure of banks without a significant transformation of the essence of their activities will not be able to lead to a real improvement in their work, and, consequently, to have a positive impact on the country’s economy.
Historical experience shows that this or that structure of the banking system depends on specific socio-economic conditions. Nevertheless, the following features of banking systems can be distinguished:
- the uniqueness of systems due to national traditions, historical development experience. Banking systems of different countries, their organizational structure depend on many factors (objective and subjective), which, along with historical, national traditions, should also include the degree of development of commodity-money relations in the country, the general level of economic growth, ways of regulating money circulation (direct and indirect), etc.
- differences in the understanding of the bank as the main element of banking systems. In world banking practice, competition between banks and non-bank credit institutions gives rise to a tendency towards a certain universalization of their activities, which in turn has caused discussions about what are the distinctive features of a bank that distinguish it from a number of credit institutions. The traditional role of banks and other (non-bank) credit institutions has changed rapidly in recent years. For example, in the West, banks carry out mortgage operations, use mortgages; building societies provide banking services to clients; large retail stores issue credit and discount cards; banks acquire stock brokerage firms, etc. At the same time, in accordance with American law, non-bank credit institutions are granted the same legal rights as banks. And in the UK, credit institutions (non-banks) have certain restrictions on their activities
- a system of supervision over the activities of commercial banks. In world banking practice, there are different approaches to organizing banking supervision. The experience of the USA is of the greatest interest. It is known, for example, that banks in the United States are of dual (more precisely, separate) subordination. This means that for a part of commercial banks (national banks) licensing, control, supervision and regulation of their activities is carried out by the federal government, and for another part – by the authorities of individual states.
The following factors influence the state and development of the banking system:
- monetary policy of the state;
- the economic situation in the country;
- the legislative framework;
- the role and place of the banking system in the country’s economy;
- interbank competition;
- tax policy of the state.
The banking system is characterized by the following features:
- the banking system includes institutions (elements) that meet specific objectives;
- the banking system has inherent properties that are characteristic only of it directly. The peculiarity of the banking system is determined by its constituent elements and the relationships that develop between them;
- the banking system is a unity of a variety of components, which is subordinated to one goal. At the same time, the components are able to replace each other without prejudice or change in this unity;
- the banking system is in constant motion, while it develops and improves;
- the banking system is a systemic closed type, since there is a certain banking secrecy. Despite this, it interacts with the external environment, with other sectors of the economy;
- the banking system has the properties of a self-regulating system. She actively responds to all changes in the economy;
- the banking system is a managed system as its activities are governed by national laws and regulations of the central bank.
Banks can carry out the following operations:
- attracting funds from individuals and legal entities into deposits,
- opening and maintaining bank accounts of individuals and legal entities;
- settlements on behalf of account holders;
- collection of monetary documents, funds and cash services;
- buying and selling foreign currency;
- attraction and placement of precious metals;
- issuance of bank guarantees and sureties;
- implementation of leasing, factoring, trust and other financial transactions.
The state of the banking sector in recent years testifies to the consolidation and development of the trend towards the recovery of banking activity. The total assets of the banking sector in real terms increased 5 times, growth was observed in 90% of credit institutions. The structure and quality of assets of credit institutions improved, which was reflected in the growth of loans provided to the real sector of the economy, a decrease in overdue debts, and an improvement in the quality of the loan portfolio. The financial performance of credit institutions has significantly improved. Banks need broad and timely information about the state of the economy, its industries, groups of enterprises, individual enterprises that apply to the bank for loans and other services. To assess the creditworthiness of clients, the economic and business market, to advise enterprises and the population, to manage the client’s property and banks, detailed information is needed.
