Briefly explain the need for banks and how they help to stimulate economic activity in the market ?

Monica, banks do play a great role in encouraging the volume of economic activities in an economy. We all know the role of credit in the success of a business. It is banks that provide cheap and easy credit facilities and advances to the business houses. Besides this, banks accept deposits and allow withdrawals on behalf of business houses. Then comes the role of inflation. It is a by-product of monetary policies pursued by the central bank in an economy. Restricted monetary policies, on one hand, may even put an end to the economic activity, while on the other hand, liberal or expansionary monetary policies may bring an economy to the boom phase of business cycle. Banks via lowering inflation rates (indirectly) and through interest rates (directly) encourages demand in an economy, which in turn raises the economic activities in an economy. 

Follow the link given below to have a reading at the major functions performed by the banks.

https://www.meritnation.com/cbse/class11-commerce/ncert-solutions/business-studies/business-studies---ncert-solution/business-services/page109-long-answers-qno2/1350_5367_34466/explain-the-functions-of-commercial-banks-with-an-example