THE ROLE OF THE BANKING SYSTEM IN PROVIDING FINANCIAL RESOURCES FOR THE DEVELOPMENT OF THE ECONOMY

Summary

The banking system is an important tool of economic development, providing financial resources for enterprises, government institutions and private individuals. It plays a key role in the redistribution of capital, contributing to the efficient functioning of the market economy. Through the mechanisms of attracting deposits and providing loans, banks provide the necessary conditions for financing investments, which in turn stimulates economic growth and development. Intensive changes in intersectoral relations require new approaches to their understanding and analysis. The role of the banking system in the economic growth of the real sector and the overall structural restructuring of the economy is the object of research by many foreign scientists. International experience demonstrates the ambiguity of these relationships, as the impact of the banking sector in developing countries and in highly developed economies differs in its nature, direction and depth of consequences. For example, in the context of the active development of non-banking financial markets (financial leasing, insurance services, fund operations, factoring, etc.) as alternative sources of ensuring institutional changes and structural reforms in developed countries, the role of the banking sector is more noticeable in the growth of weaker economies, where the alternative segment is developing slower. An important role is also played by the economic cycle in which a particular country is. In particular, during a recession, the causal relationships between changes in the development of the banking sector and the rate of economic growth are usually better traced than during a period of relative macroeconomic stability. Finally, it is worth considering the perspective of analyzing these relationships: in the short term, the consequences are unstable and less obvious due to the principle of the lag reaction of the economy to changes in the banking system. Banks collect savings from households and businesses by offering a variety of deposit products such as savings accounts, time deposits and certificates of deposit. This allows the concentration of a large amount of capital, which can be used for lending. Attracting savings ensures the stability of the banking system and the ability to make long-term investments.