THEORIES REGARDING THE BANKING ACTIVITY

The banking activity is varied and complex and thus it is difficult to define banks. The literature on the field several theories that try to explain the existence of banks in economy were developed. These theories start from certain concepts such as: monitoring commissioning, information processing, liquidity transformation, smoothing of consumption and commitment method. Understanding the role banks have in the financial systems is one of the fundamental themes in eco-nomic and financial theory. The efficiency of the process through which economies are channeled into productive activities is crucial for the economic growth and well being. Banks are a part of this process of transfer of the funds from surplus agents towards deficit agents. Key words: banking theory, functions of banks, banking crisi