What are the advantages of commercial banks?



Advantages of commercial banks are as follows:
(i) Commercial banks facilitate savings and capital formation by accepting deposits from the households and firms.
(ii) They offer loans to the households for consumption purposes and to the firms for investment purpose. This raises the level of Aggregate Demand in the economy which is very important during depression.
(iii) Commercial banks offer overdraft facilities to the firms. This helps the firms in fulfilling their emergent financial requirements.
(iv) They create credit and accordingly contribute to the flow of money in the economy.