Economics Capitalism Questions
The role of the banking sector in a capitalist system is to facilitate the flow of funds between savers and borrowers, provide financial services such as loans and credit, and support economic growth by allocating capital efficiently. Banks also play a crucial role in creating money through the process of fractional reserve banking, which expands the money supply and stimulates economic activity. Additionally, the banking sector helps in the mobilization of savings, promotes investment, and acts as a financial intermediary between individuals, businesses, and the government.