Basics of Financial Institutions
Financial institutions deal with financial transactions such as investments, currency exchange, loans and deposits. The government heavily regulates them since they comprise an essential part of the economy. Market stability and consumer protection are built into the foundation of financial institutions.
The Federal Deposit Insurance Corporation (FDIC) insures financial institutions so that the stock market does not become vulnerable. The FDIC was formed in 1933 because of bank failures that happened in the 1920s and 1930s. A country's banking system is a great predictor of its economic stability. When banking systems are not stable, the stock market goes into panic mode. In a global economy, financial institutions need to employ strategic thinking in order to manage and assess banking risks.
Different Types of Financial Institutions
Financial institutions offer several different types of products depending on its type. Here are the different types of financial institutions:
There are many different types of financial institutions that assist individuals and companies in facilitating monetary transactions. Banks and credit unions are standard financial institutions that provide deposit services as well as loans when needed. Investment banks provide wealth growth and management. Online financial institutions exist without a storefront. They offer many of the same services as their brick and mortar counterparts. Many of these online financial institutions offer lower cost products due to their lower overhead costs.Learn more about Philosophy