Financial institution
Financial Institution
A Financial Institution (pronunciation: /ˌfɪnænʃəl ɪnstɪˈtjuːʃən/) is an establishment that conducts financial transactions such as investments, loans, and deposits. The term is generally synonymous with banking and investment institutions and is distinct from non-bank institutions.
Etymology
The term "Financial Institution" is derived from the Latin words 'finis' meaning 'end' or 'boundary' and 'institutum' meaning 'established'. It refers to an establishment set up for the purpose of dealing with financial transactions.
Types of Financial Institutions
There are several types of financial institutions, including:
- Commercial Banks: These are profit-seeking businesses that accept deposits, make loans, and provide related services.
- Credit Unions: These are member-owned financial cooperatives that provide credit and other financial services to their members.
- Insurance Companies: These are companies that provide risk management in the form of insurance contracts.
- Investment Banks: These are specialized financial institutions that assist individuals, corporations, and governments in raising financial capital.
- Brokerage Firms: These are businesses that act as intermediaries between buyers and sellers in financial transactions.
Related Terms
- Banking: The business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to conduct economic activities such as making a profit or simply covering operating expenses.
- Investment: The action or process of investing money for profit or material result.
- Loan: A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
- Deposit: A sum payable as a first installment on the purchase of something or as a pledge for a contract, the balance being payable later.
External links
- Medical encyclopedia article on Financial institution
- Wikipedia's article - Financial institution
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