A financial institution is a business that provides financial services to people or institutions. These include banks, credit institutions, non-bank lenders, insurance companies, and other organizations. The most common type of financial institution is banks.
A financial institution’s role in the economy is to provide loans, take deposits, and offer other products or services to consumers, businesses, and governments.
Functions of a Financial Institution
The functions of a financial institution can vary depending on the type of business it operates. For example, banks provide their customers with banking services such as savings accounts and loans. Credit card companies offer credit cards to their customers with reward points and cash back rewards for purchases: investment firms provide investment advice and stocks to their clients.
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