Management and historical development - early banking

• Pages: 44-52

44

Vol. 7 No.2

September, 2021

Balkan Journal of Interdisciplinary Research

IIPCCL Publishing, Graz-Austria

ISSN 2410-759X

Acces online at www.iipccl.org

Management and historical development - early banking

Dr. Burim Berisha

University of Business and Technology – Kosovo

Mr.sc. Selami Zejnullahu

ATK

Abstract

Banks are unique f‌i nancial intermediaries. they are the only intermediaries that intermediate

between

all ultimate lenders and borrowers and all other non-bank f‌i nancial intermediaries.

In this way they

perform crucial functions, including providing the means of payments. In

fact, they are such signif‌i cant

intermediaries that their very survival (particularly the large

banks) is in the interests of the country;

there exist social costs to their failure.

For this r eason, b anks are the most regulated intermediaries. In most countries, the central

bank regulates

and supervises the banks, and they are obliged to h ave large departments and

skilled persons to carry out

this function. T

he

banks are innovative and create new products

continually, because of the competitive

nature of banking, making the task of the supervisor

challenging.

The

hardware and software systems requirements of banks are sophisticated, not only

because of the

complex deals they undertake, but to cater for the strict and diverse reporting

requirements of banks.

T

his

and the high capital resource requirements create substantial

barriers to entry.

Banks exist because of the information costs they carry and because of the demand for liquidity

by deposit

clients. Banks earn their keep by the management of f‌i nancial risks, and this is

what dif‌f erentiates them

from other companies. Essentially, they are risk managers.

But

banks need to be p l a n n i n g how, in the future, existing competitive advantage is going to be

sustained

and extended. T

he

outlook for banks is optimistic, provided they can create,

maintain, and sustain a

competitive advantage in the products and services (old and new)

they of‌f er.”

The

main threat to banking is t h e s e cu r i ti e s m a rkets. Many large, highly rated companies do

not require

the intermediation of banks to satisfy their borrowing requirements. Cognizant of

this threat, many banks

have are involved in the creation of marketable debt instruments,

and hold many of these in portfolio.

The

most unique function of banks is their money creating ability, under the guidance

of the c entral

bank, and the central bank uses t he prof‌i t- maximizing behavior of banks to

execute monetary policy.

T

his

is where interest rates have their genesis.

Keywords: Management, historical development, banking.

Introduction

Some authorities, relying upon a broad def‌i nition of banking that equates it with any

sort of intermediation activity, trace banking as far back as ancient Mesopotamia,

where temples, royal palaces, and some private houses served as storage facilities

for valuable commodities such as grain, the ownership of which could be transferred