Financial Institutions

What are financial institutions?

What is a financial institution? (exact definition)

An establishment that focuses on dealing with financial transactions, such as investments, loans and deposits. Conventionally, financial institutions are composed of organizations such as banks, trust companies, insurance companies and investment dealers. Almost everyone has dealt with a financial institution on a regular basis. Everything from depositing money to taking out loans and exchange currencies must be done through financial institutions

Financial Markets and Financial Institutions

A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.

A financial institution is an establishment that focuses on dealing with financial transactions, such as investments, loans and deposits.

Financial markets (such as those that trade stocks or bonds), instruments (from bank CDs to futures and derivatives), and institutions (from banks to insurance companies to mutual funds and pension funds) provide opportunities for investors to specialize in particular markets or services, diversify risks, or both.

Types of Financial institutions-

  • Commercial Banks
  • Investment Banks
  • Insurance Companies
  • Brokerages
  • Investment Companies
  • Nonbank Financial Institutions (Credit Unions)
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