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Explain the role in the economy of a range of financial institutions.

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Introduction

Unit 4 - Finance for business Task 1 AO6 Explain the role in the economy of a range of financial institutions. High street banks The high street banks are known usually as commercial banks. Examples of commercial or high street banks are Barclays PLC, HSBC PLC, Lloyds PLC, and Halifax. These are the banks that most people are familiar with. The products that are offered by the high street banks are Mortgages, General Loans, Current Accounts, Savings Accounts, Foreign Exchange. They also provide insurance and assurance. The services that are offered by the high street banks are Direct Debit, Standing Orders, and Pensions. They also offer Debit and Credit Cards. As technology is being used mostly and is very popular, most of the high street banks have introduced a system called Online Internet Banking. This allows you to purchase products from the internet and this is quick and efficient. All of these services are also provided to business customers. ...read more.

Middle

The biggest problem would be that new business would find it extremely hard to raise start up costs, and if there are no new business being open then this means that the unemployment rate would rapidly increase because of the lack of jobs available. Furthermore the amount of services and products available would decrease because there will be less people providing products or services. So as a result in this the high street bank's link to the UK economy is to look after customer's money safely. Provide money to customers who are in need of it, and this allows people to trade. This also allows individuals to have savings, but if people do decide to save money and not spend it this causes inflation, and prices and interest rates go up. Their other link to the UK economy is to give support and advice to businesses because this creates jobs so people are set sufficient. This then prevents people relying on the welfare state. ...read more.

Conclusion

When this happens this provides employment, this helps them with tax. The tax that is raised gives support to things such as education, health, and the welfare state. The merchant bank also supports foreign trade. This is done so it helps businesses import and export. When this is done this improves the wealth of the country. Another link to the UK economy is that the merchant banks support new businesses by underwriting the issues of shares onto the stock exchange. This helps companies expand, and when companies expand more jobs are created and the government then raise tax. When there is an expansion of companies the most important factor is that the consumers have more choices. Building Society A building society offers similar services like a bank. Examples of building societies are Nationwide and Coventry building society. A building society offers products such as Loans and Mortgages. Building societies are known as Mutual Societies. A building society is owned by the people who save or borrow with them. Any of the profits the building society get are to be shared out with the customers. ...read more.

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