Banking in Developing Countries
The type of national economic system that characterizes developing countries plays a key role in determining the nature of the banking system. In capitalist countries a system of private enterprise in banking prevails. In a number of socialist countries (for example,
Banks in developing countries are similar to their counterparts in developed nations. Commercial banks accept and transfer deposits and are active lenders, especially for short-term purposes. Other financial intermediaries, particularly government-owned development banks, arrange long-term loans. Banks are often used to finance government expenditures. The banking system may also play a major role in financing exports.
In the poorer countries, an extensive but primitive no monetary sector usually continues to exist. It is the special task of the banking community to encourage the use of money and introduce banking habits among the population.