1. Lesson Objectives All students will understand Most students will
The role of banks in our economy
Most students will
Understand the importance of credit
Some students will
Understand the complexities of interest rates and their impact on the economy
Progress Arrow

2. The role of banks Discussion points pg 73
Banks take deposits from individuals and businesses that wish to save (savings accounts)
Banks take deposits from individuals and businesses that wish to keep their money safe and manage their outgoings (current accounts)
Banks lend money to individuals and businesses
Banks operate on a large scale and rely on the fact that not all of their customers will want to withdraw their money at the same time

3. Providing credit
Credit – if managed well – is considered an important process and good for our economy
It enables
Businesses to start up
Businesses to expand
Construction projects
Individuals to make expensive purchases like houses and cars
It would not be so great if a loan was required to cover the working capital of a business – the finance needed for the day-to-day running of the business

4. Bank loans
Bank loans will of course have to be paid back with interest, which is basically the charge of the loan (the price of the loan)
The interest rate charged in normally bespoke to the loan and will depend on
Risk associated with the loan, which is also linked to the collateral – what the loan is secured against e.g. a property
Reason for loan
Length of the loan

5. Task
“More Magic” pg 76

6. Banking regulation
Since the financial crisis of 2008, most governments have regulated their banks to ensure the catastrophic bank failures are not repeated.
This had made many loans more difficult to obtain – “credit crunch”
But confidence in the banks has grown again

7. Task
Computer task – “Find out” pg 76