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What are the financial Institutions and its types?

Oct 21, 2015 12:54 IST

    Financial institution as the name suggests is the foundation, which conducts financial activities like loans, deposits and investment. Every individual generally deals with financial establishment on regular basis. Start from deposit of money to taking loans and exchange of currency is conducted these institutions.

    In other words, these are establishment, which processes monetary activities, business loans, private loans, deposits and investment of customer. These institutes are considered as the key to the financial intermediation process, in which financial institutions relocate funds from those who save money to those who borrow money.

    Various Types of Financial Institutes

    We  are providing list of some important financial institutions that are emerging in the economy to help the people in fulfilment their monitory requirements.

    1. Investment Banks

    The Investment Banks are the financial intermediary, which carry out a gamut services for businesses and some governments. A wide array of services comprises underwriting debt and equity offerings, acting as an intermediary between an issuer of securities and the investing public, making markets, facilitating mergers and other corporate reorganizations, and acting as a broker for institutional clients.

    2. Commercial Banks

    These are very common and important type of financial institutions that also every individual deals with. These banks accept deposits and offer security and convenience to their customers. Part of the original purpose of banks was to offer customers safe keeping for their money. Due to these banks, consumers no longer need to keep large amounts of currency on hand; transactions can be handled with checks, debit cards or credit cards, instead.

    3. Brokerages

    Brokerage as the name suggests is a financial intermediary that acts between sellers and buyers to provide facilities of securities transaction. A Complete Brokerage services offers portfolio management, trade executions, investment advice, high level of services and so on.

    4. Investment Companies

    Investment Companies are the corporations or a trust through which individuals invest in diversified, professionally managed portfolios of securities by pooling their funds with those of other investors.  Some Important Type of Financial Institutions are as follows:

    • Unit Investment Trusts,
    • Managed Investment Companies
    • Face Amount Certificate Companies  

    5. Insurance Companies

    Insurance Companies bear risks by collection of premium from people, organization who wants to protect themselves and their family against a particular loss, such as a fire, car accident, illness, lawsuit, disability or death. Insurance helps individuals and companies manage risk and preserve wealth. Generally all Insurance companies’ uses statistical analysis to project what their actual losses will be within a given class.

    DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.

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