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# Bank Economic Development

## Definition

The contribution of banking to economic growth through more efficient capital allocation, reduced transaction costs, and the conversion of dead stock into productive capital. This development function is central to banking's economic role.

## Source Chapter

Book II, Chapter 2

## Context

Smith analyses how banking contributes to economic development by making more efficient use of capital and facilitating commerce. He shows how these contributions increase the overall productivity and wealth of society.

## Economic Domain

Accumulation

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