But the service provided by financial institution depends on its type. The various financial institutions generally act as the intermediaries between the capital market and debt market. Various types of Financial Institutions are as follows:
The capital market focuses on money borrowed and lent for periods of five years or more. In the money market, the main activity centres around funds, which are lent for periods from as short as overnight up to about one year. These institutions operate in the short-term (money) market and the long-term (capital) market. Banks, building societies, investment trusts and pension funds are just a few of the organisations whose job it is to channel funds to those that require them. The variety of financial institutions reveals the complex requirements of both borrowers and lenders. The financial institutions are generally regulated by the financial laws of government authority. Financial institutions are the firms that provide financial services and advices to its clients. But banks are not even near to be the only financial institutions. Probably the most important financial service provided by financial institutions is acting as financial intermediaries.įirst thing that people think of when hearing words financial institutions are banks. In financial economics, a financial institution an institution that provides financial services for its clients or members.
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