Commercial banks play an important role in economic development of developing countries. Economic development involves investment in various sectors of the economy. The banks collect savings from the people and mobilize savings for investment in industrial project. The investors borrow from banks to finance the projects.
Special funds are provided to the investors for the completion of projects. The bank provide a gurantee for industrial loan from international agencies. The foreign capital, flows to developing countries for investment in projects.
Commercial banks are involved in the process of increasing the wealth of the economy, particularly the capital goods needed for raising productivity.