Banking administration
Before talking about what bank administration is, we must know what banks are and what they are in charge of. The activities of banks give rise to banking operations, which are classified as fundamental and accessory. Banking activity is double: intermediate and direct, of which the most important is the intermediary.
We say that the intermediary activity is that activity or action carried out by banks to capture resources available in the market to dedicate them for investment or consumption purposes. These resources are captured in the market to dedicate them for investment or consumption purposes. These resources captured in the market can be internal or external, depending on their origin.
The main internal resources are bank deposits, and the main external resources are those coming from foreign capital markets.
Through direct activity, banks intervene in funds from their capital and reserves.
Purposes and Problems of Bank Administration,
Commercial banks are credit institutions that try to make a profit for their shareholders, and, at the same time, organizations endowed with the power to create money, because the items of their liabilities consisting of deposits are money (demand deposits) or quasi. -Money (savings and term deposits).
With respect to the training of resources through bank deposits, commercial banks have to face a more acute liquidity problem than the one faced by the other private credit institutions.
The first task of bank management is to meet the legal reserve requirements and be prepared to deal with deposit withdrawals. Banks have to be prepared to meet their customers’ requests for money without any discussion and therefore have coins and bills in their safe vaults.
Naturally, some customers are depositing money while others are withdrawing, so most withdrawals can be handled with the deposited money on the same day. But deposits and withdrawals never exactly balance. When withdrawals exceed deposits, the bank makes payments from its cash reserve in the vault.
Bank operations give rise to banking operations, which operations are classified as fundamental and accessory. The banking operation is a double intermediary and direct, of which the most important is the intermediate operation.
From three points of view we can consider the banks and their operations in the economic field in its first aspect is a matter of banking science, in the second of banking law, and in the third of banking operations.
The banks tend to satisfy real and positive operations to the social and political demands, not only of the present but also of the future.
The banking technique contributes to the solution of the multiple problems that arise from the operations of banks. And provides an important service to the development of banking law because it provides the essential practical element for the operations of the legal norm applicable to banking matters.
Commercial banks are operations that grant credit from their own funds or from funds that they have borrowed or created.
Commercial banks are credit operations that try to make a profit for their shareholders and at the same time organizations endowed with the power to create money because the items of their liabilities consist of money deposits, quasi-money deposits, savings, and long term.
Commercial banks have a double operation:
Intermediary when they obtain resources available in the market to use in their credit operations.
Direct when the two that come from the capital contributions of its shareholders intervene.
Fundamental operations are classified into active and passive:
Active operations are those through which commercial banks invest the money they obtain in the market and through these they become creditors of their clients.
Passive operations are those through which commercial banks obtain the resources available in the market and through these they become debtors of their clients.
