These include liquidity function, saving function, brokerage function, payments function. It is likely that a developing economy develop a strong financial sector. Banking is crucial to this development. From the discussion in problem 1, the banking system will serve more functions better than, say, a pure stock market could. Loans, securities, reserves.
Loans are a source of income for the bank.
Indeed, the primary reason for banks' existence is to finance the development of area businesses, as well as consumer purchases. Although these are the most risky of the banks assets, they are likely to generate most revenue. Securities are necessary to diversify risk. Treasury securities and investment-grade corporate securities will pay less interest than loans, but are less likely to default. Reserves are necessary to meet legal requirements and to ensure liquidity to meet the demands of depositors.