Provision of liquidity
Banks have always ensured that liquid assets are available in the market and also at a high volume. This is guaranteed by giving businesses credit when they need them, and that creates a flow of money thus empowering the economy concerning cash flow. Lack of money in an economy causes recession hence increasing the inflation rate because of an increase in the purchasing power of goods. A high liquid market like Singapore’s then ensures the economy has enough cash flow.
Banks in Singapore support entrepreneurship by the fact they give loans to any aspiring entrepreneur wishing to invest. Besides, they provide these loans at a very affordable interest rate thereby promoting the spirit of investment. Those entrepreneurs invest in the private sector which is very keen on growing the economy from one level to another.
Banks act as instruments for dealing with currencies of other countries. For instance, an investor with U.S dollars may go to a bank in Singapore and trade his home country dollars with Singapore dollars so that they can acquire the local currency to be able to carry out transactions. Facilitation of conversion of foreign currency increases the purchasing power hence contributing in taxes which enhance the growth of Singapore’s economy.
Remittance of money
This function of remitting money from one country to another is mainly facilitated by banks because they have the mandate of doing so. For example, they can facilitate the transfer of cash from Singapore to England, and that expands the internal and external markets of Singapore which in turn increases the revenue collections for the government, and that facilitates the growth of the economy.
Provision of consultancy services
Banks in Singapore provide consultancy services in various sectors such as industrial, agricultural, commercial and many other areas. Such consultancy advises the various industries how to mitigate risk and how they can propel the growth of their industry. The consultancy also advises them on cost cutting measures as well as increasing the value and quality of production. This promotes the growth of such sectors which encourages the growth of the economy.
The banking sector is very crucial in growing the economy of its respective country. Banks should, therefore, strive to improve the economy so that they can conduct business in a favourable environment which also becomes profitable for them.