Role of Financial Institutions Essay

707 Words3 Pages
Financial institutions are those organizations, that are involved in providing various types of financial services to their customers. The financial institutions are controlled and supervised by the rules and regulations delineated by government authorities. Some of the financial institutions also function as mediators in share markets and debt security markets. There the principal function of financial institutions is to collect funds from the investors and direct the funds to various financial services providers in search for those funds. These are the various Financial Institutions: • Banks • Stock Brokerage Firms • Non Banking Financial Institutions • Building Societies • Asset Management Firms • Credit Unions • Insurance Companies Financial institutions deal with various financial activities associated with bonds, debentures, stocks, loans, risk diversification, insurance, hedging, retirement planning, investment, portfolio management, and many other types of related functions. With the help of their functions, the financial institutions transfer money or funds to various tiers of economy and thus play a significant role in acting upon the domestic and the international economic scenario. For carrying out their business operations, financial institutions implement different types of economic models. They assist their clients and investors to maximize their profits by rendering appropriate guidance. Financial institutions also impart a wide range of educational programs to educate the investors on the fundamentals of investment and also regarding the valuation of stock, bonds, assets, foreign exchanges, and commodities. Financial institutions can be either private or public in nature. The most common forms of financial institutions can be categorized into the following types: • Business finance company • Mortgage finance company • Car
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