Financial institutions are the firms that provide financial services and advices to its clients. Commercial banks, credit unions, stock brokerage firms and asset management firms are the major types of financial institutions. Insurance companies, finance companies, building societies and retailers are the other types of financial institutions.
The financial institutions are generally regulated by the financial laws of government authority. The various financial institutions generally act as the intermediaries between the capital market and debt market. But the service provided by financial institution depends on its type. The financial institutions are also responsible to transfer funds from investors to the companies. Typically, these are the key entities that control the flow of money in the economy.
The services provided by the various types of financial institutions may vary from one institution to another. For example, the services offered by the commercial banks are - insurance services, mortgages, loans and credit cards.
The services provided by the brokerage firms, on the other hand, are different and they are - insurance, securities, mortgages, loans, credit cards, money market and check writing. The insurance companies offer - insurance services, securities, buying or selling service of the real estates, mortgages, loans, credit cards and check writing.
The credit union is co-operative financial institution, which is usually controlled by the members of the union. The major difference between the credit unions and banks is that the credit unions are owned by the members having accounts in it.
The stock brokerage firms are the other types of financial institutions that help both the corporations and individuals to invest in the stock market.
Another type of financial institution is the asset management firms. The prime functionality of these firms is to manage various securities and assets to meet the financial goals of the investors. The firms also offer fund management advice and decisions to the corporations and individuals.