History of Banking and Finance

History of banking and finance goes back to the early stage of the human civilization, when it was growing in the cradles of different cultures. At the very hour, when the early people learned to exchange commodities, these two concepts were born.
History of finance Globalization is circulating the Western form of finance in the whole universe. The recent development in the field of finance has been labeled by the evolution of advanced technological machinery for supervising money.

But, the ancient examples of finance are short-term loans introduced by the cultures in the Middle East, North America, Asia, and Africa, and the mentionable factor is that the concept of money had been invented in these regions and by these same civilizations.

Once the concept of money came in existence, the gradual developments started and the first banks were established in Europe in the fourteenth century. This was made possible by the developments of the legal and accounting systems which enabled money-tracking.
Establishments of banks encouraged people to share their wealth for huge dealings. The 17th century marked another change when the first stock markets started rolling. It also provided the business sector and the governments an opportunity to collect funds by selling equity and the money-borrowing concept was altered.

There were calculated exchanges in fashion between the pre-historic self sufficient groups, but it was not done frequently. Almost 8,500 years ago, in Turkey, people used lumps of copper as money. The paper money, and earlier the leather money, was invented by the Chinese people. Later, the concepts of insurance, commodity markets, and security markets were invented by the Phoenician, Artherian, and other Mediterranean civilizations, and the reformations in northern Europe modified the securities market. In between, Italy played a vital role in the game when concepts of corporations, double-entry book-keeping and banks developed there. In 1792, the New York Stock Exchange was created by an agreement between 24 businessmen. In the second half of the nineteenth century, the board of trades were set up at different places, mainly around the Mississippi river and after fifty years, the modern exchanges with clearinghouses came into existence. Now-a-days, different types of financial services are designed and offered according to the needs of the market.

These services are:
Trust company
Stock exchange
Stock broker
Retail broker
Mutual funds
Industrial Loan
Export Credit
Financial advise
Diversified finance
Financial planning
Credit ratings
Non-banking finance
Small business finance

History of Banking

Traces of banking can be found in the early history of Egypt, Babylonia, and Greece. The temples at these places practiced the early form of banking in the form of approving loans. These temples provided gold and silver which were deposited for safekeeping, as loans to the borrowers and charged high interest rates on those items. The private banking which was started in 600 B.C. was modified by the Greeks, Romans and Byzantines. Medieval banking was leaded mainly by the Jews and Levantine.

Next, emerged some particular purpose oriented banks like the Bank of Venice (1171) and the Bank of England, which looked after the loans to the government, and the Bank of Amsterdam (1694) was formed to receive the gold and silver deposits. With the development in the business sector, the banking sector also developed proportionately and the eighteenth and nineteenth century experienced the rapid growth in this sector.

In the modern times, the banking sector developed with the developing sector of trade and commerce. Today, there are different types of banks has been established for different purposes.

These are the types of banks operating in today’s market:

Commercial Banks: This type of banking includes national and state-charted banks, stock savings banks, and industrial banks. This kind of banking service has provided many services to the society which includes,the basic functions of savings, providing loans, dealing in time deposits, etc. The reserve requirements of these banks are totally different from the mutual saving banks.
Mutual Savings Bank: This type of banks provides some limited type of loans and deals in savings and other deposits. But recently the modifications has been done and now, these banks are also providing a huge number of facilities. In these banks, the investment and loan amount depends on the available customer’s deposits.
Once, the national level banks started rolling, the concept of international banking emerged. Actually, the growth in the trade and commerce, the growth in the exchanges between countries, the multi-national trades, etc. demanded some kind of international organization to carry out the business smoothly.

So, the following international banks were formed in order to fulfill the demands of the modern global market:
World Bank (International Bank for Reconstruction and Development): It was founded in 1945 with the view to approve loans to private investors and to the governments of different countries.
IMF (International Monetary Fund): The bank has been involved in simplifying the process of debt clearance between the nations. It has also provided valuable suggestions to the members in the field of international banking.
The European Central Bank (European monetary system): Has been founded in 1998 to handle the joint monetary policy of those European countries, which have adopted a single currency.

There are several organizations, which have developed in the recent times and which are performing some of the orthodox banking operations, but these are not under the supervision of state or federal banking authorities. These organizations are also serving the society in the same manner as the traditional banks serve.

Some of these organizations are:
Savings associations
Loan associations
Finance companies
Mortgage companies
Insurance companies
Credit unions
Investment bankers
Credit securities
Brokers and dealers in securities

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