In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the greatest important financial service provided by financial institutions is acting as financial intermediaries. Most financial institutions are regulated by the government. Broadly speaking, there are three major types of financial institutions: Depositary Institutions : Deposit-taking institutions that accept and manage deposits and make loans, including banks, building societies, credit unions, trust companies, and mortgage loan companies Contractual Institutions : Insurance companies and pension funds; and Investment Institutions : Investment Banks, underwriters, brokerage firms. Some experts see a tendency of global homogenisation of financial institutions, which means that institutions tend to invest in similar areas and have similar investment strategies. Consequences might be that there will be no banks that serve specific target groups and e.g. small scale producers are left behind.

Leave a Reply