History of Banking

Evaluation of Banking
It has no so for been decided as how the world of “bank” originated. Some others
opine that this word is derived from the word “bancus” which means bench. The e
xplanation of this origin is attributed to the fact the Jews in Lombardy transec
ted by the business.
Other authorities hold the opinion that the word bank is derived from the German
word “back” which means joint stock fund later on when the German occupied the
major part of Italy the word back was italianiesed into bank.
It is there for not possible to decide that which one opinion is the correct.

Early Growth
Banking in fact is as primitive as human society, for veer since man came to rea
lize the importance of money as a medium of exchange, the necessity of controlli
ng or regulation agency institution was naturally was felt. Perhaps it were the
Babylonians who developed the banking as early as 2000 BC. It was evident that t
he temples of Babylon were used as bank because of prevalent respect and confide
nce in the clergy.
It is not certain that how and who invented money but history record that gyges
king of Lydia casted electrum (a natural alloy of gold and silver) ingots the id
entical shape and uniform weight win a triple emblem engraved on it as an offici
al guarantee of value in 687 BC.
Similarly in 1690 the bank of hum berg came into existence in hum berg with busi
ness of excepting deposit of fine silver or of foreign money and to run accounts
on these deposits of fine silver and foreign moneys and run accounts on these d
eposits. It detailed with until 1873 when it was merged with rich bank. And from
that era to date the banks are going to change their style of banking and servi
ces. In Pakistan the banking industry is developing day by day.
There is healthy competition in private and public sector banking. A Well-develo
ped monetary sector is pre-requisite for the development of any country. The ban
king system can contribute greatly. The banking system can contribute greatly to
the realization of a nation’s potentialities for development by helping to keep
aggregate demand in proper balance with the supply of those resources.
The spread between the interest rates it pays on its own obligations of others c
onstitutes the margin from which the other expenses of doing business must be de
ducted .The next profit after these deductions represents the return to the shar
eholders for their participation in the activity of financial intermediary.