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Financial institutions are businesses which offer multiple services in banking and finance. The services customers receive may include savings and checking accounts, loans, investments, and financial counseling. The benefits consumers gain by using financial institutions includes convenience, cost savings, safety, and security.
Insurances Companies
Insurance companies may be classified as 1. Life insurance companies, which sell life insurance, annuities and pensions products. 2. Non-life or general insurance companies, which sell other types of insurance.
There are also smaller non depository institutions, such as pawnshops that make loans based on the value of property such as jewelry, electronics, or other valuable items. Pawnshops charge much higher fees than other lending institutions.
Mutual Fund
An investment which is comprised of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market securities and similar assets.
. Brokerage Houses
Stock brokers assist people in investing, online only companies are called 'discount brokerages', companies with a branch presence are called 'full service brokerages' or 'private client services.
. Investment company
Generally, an "investment company" is a company (corporation, business trust, partnership, or limited liability company) that issues securities and is primarily engaged in the business of investing in securities.
Depository institutions
Figure 13.3. Where Our Money Is Deposited
Banks
A bank is a commercial or state institution that provides financial services, including issuing money in various forms, receiving deposits of money, lending money and processing transactions and the creating of credit.
1. Central Bank
A central bank, reserve bank or monetary authority, is an entity responsible for the monetary policy of its country or of a group of member states, such as the European Central Bank (ECB) in the European Union, the Federal Reserve System in the United States of America,
1. Central Bank
Its primary responsibility is to maintain the stability of the national currency and money supply, but more active duties include controlling subsidized-loan interest rates, and acting as a lender of last resort to the banking sector during times of financial crisis
2. Commercial Banks
A commercial bank accepts deposits from customers and in turn makes loans, even in excess of the deposits; a process known as fractional-reserve banking. Some banks (called Banks of issue) issue banknotes as legal tender.
Number of institutions
Number of failed assisted institutions
Small banks make fewer commercial and industrial loans and more real estate loans than do big banks
Small banks
Sales
C.i 1,5 0,1 0,6 other 0,5 real estate 7,3 credit cart consumer
Large banks
Sales
0,9 0,7 1,1 5,3 2 REAL ESTATE 53% C&I OTHER CREDIT CARD CONSUMER
4. Saving Banks
A saving bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.
6. Islamic Banks
Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law (Sharia) principles and guided by Islamic economics. In particular, Islamic law prohibits usury, the collection and payment of interest, also commonly called riba in Islamic discourse.
7. Specialized Banks
1. ZTBL The Zarai Taraqiati Bank Limited It is also known as Agricultural Development Bank of Pakistan (ADBP). It is the premier financial institution geared towards the development of the agricultural sector through the provision of financial services and technical know-how.
9. Leasing Companies
A lease or tenancy is the right to use or occupy personal property or real property given by a lessor to another person (usually called the lessee or tenant) for a fixed or indefinite period of time, whereby the lessee obtains exclusive possession of the property in return for paying the lessor a fixed or determinable consideration (payment).
A bank holds on to only a fraction of the money that it takes inan amount called its reservesand lends the rest out to individuals, businesses, and governments. In turn, borrowers put some of these funds back into the banking system, where they become available to other borrowers. The money multiplier effect ensures that the cycle expands
Conclusion
Financial institutions serve as financial intermediaries between savers and borrowers and direct the flow of funds between the two groups.
Those that accept deposits from customersdepository institutions include commercial banks, savings banks, and credit unions; those that dontnondepository institutionsinclude finance companies, insurance companies, and brokerage firms.
Financial institutions:
Accept deposits Transfer funds Lend money Storing valuables Provide financial advice and investment services Manage trusts