When the concept of banking first arrived on the scene, a bank was viewed as a place where people could deposit their money in order to keep it safe. This was the premise of the most ancient of the banks.

The next major change in banking was the concept of charging interest for a loan. For the longest period of time, laws against Usury kept this from happening in Christian countries – an interpretation of the Bible forbade charging interest on loans. Later, this expanded to paying people interest to hold deposits within the bank.

The practice of taking deposits and lending money is the bread and butter business of banking. It’s estimated that the number of bank loans (including credit card debt) exceeds the number of deposit accounts by a factor of three worldwide.

All of which comes at a nice interest though! Speaking for myself, my first relationship with a bank was when I opened my first savings account. But it has been the bank loans that have made me dependent on the bank for my survival.

In fact, my first loan was for the purchase of my first new car. After this, I took a home mortgage loan to purchase a condo.

You see, it’s unlikely that anyone has money sitting around to buy a house for cash on the transaction. Most people lack the discipline to save money every month for a house when paying rent; this opens up the next kind of bank loan – the mortgage loan.

These mortgages are usually made with low interest and long repayment terms (it works out nicely for both parties that way), with payment terms that run for 10 to 30 years depending on the loan.

Other bank loans are issued for various reasons, from personal loans to buy items that matter to you, all the way to lines of credit tied to an asset. Personal loans are usually used for things like marriages, emergencies, and major repaired. Secured loans are usually tied to improving the value of the asset that’s securing the loan.

Another type of loan is the student education loan. Other debt that gets thrown at students are loans to pay for computers and cars and stereos, plus unsecured debt via credit cards.

Broadly speaking, even credit cards are a form of a bank loan that you can repay. And some banks even offer you loans to pay up other loans you may have taken in the past!

All of these consumer bank loans, mortgages included, are nothing compared to the banking transactions build on inter-business lending.

Whether it is a small business operated out of the home or a large business that needs millions of dollars in order to tide over a cash flow problem or to acquire assets, banks loans issued to businesses far outstrip individual bank loans.

Without business loans and credit, the vast majority of businesses would collapse. This business loan mentality is what drives the modern financial world.