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# Bank Transaction Costs

## Definition

The expenses associated with banking operations, including note issuance, clearing, and lending activities. These costs affect the efficiency of banking services and their contribution to economic development.

## Source Chapter

Book II, Chapter 2

## Context

Smith examines how transaction costs affect banking efficiency and economic development. He shows how innovations that reduce transaction costs can significantly enhance the contribution of banking to economic growth.

## Economic Domain

Accumulation

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