Final answer:
Banks provide important services to businesses by facilitating transactions, acting as financial intermediaries, and lowering transaction costs, which together help businesses control cash efficiently and support economic activity.
Step-by-step explanation:
Banks play a crucial role in the economy by providing several key services that help businesses control cash. Three important services provided by banks to support businesses include facilitating transactions, serving as financial intermediaries, and lowering transaction costs.
- Facilitating Transactions: Banks make it possible for transactions to occur smoothly by allowing businesses to store money in checking or savings accounts and providing various methods of drawing on those funds, such as direct withdrawals, checks, and debit cards.
- Financial Intermediaries: As financial intermediaries, banks connect savers who supply financial capital with borrowers who demand loans, which facilitates the flow of money within the financial capital markets.
- Lowering Transaction Costs: By reducing the need to find individual lenders or borrowers, banks decrease the transaction costs associated with lending and borrowing, making it easier and more efficient for businesses to manage their finances.
Banks are fundamental in supporting the exchange of goods and services for money, the saving and loaning of money, and the overall creation of money. Through these services, they play a significant part in ensuring financial stability and economic growth.