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FINANCIAL INSTITUTIONS
CONTENT
- Meaning of Financial Institution
- Types of Financial Institutions
- Definition and Types of Banks
- Meaning and Segments of Financial Systems
Meaning of Financial Institution
Financial institution refers to all business organisations which hold money for individuals and institutions and may borrow money from them in order to give loans or make other investments.
Types of Financial Institutions
Financial institutions may be divided into two major groups- banking and non-banking financial institutions. The major difference between the banking and the non-banking financial institutions is that the liabilities of the banking institutions are counted as part of the total supply of money while those of the non-banking institutions are excluded from the money supply.
Banking Financial Institutions
Banking financial institutions include:
- Central bank
- Commercial banks
- Merchant banks
- Development banks
- Saving banks
- Mortgage bank
Non-banking Financial Institutions
Non-banking financial institutions include:
- Traditional financial institution
- Insurance companies
- Hire purchase companies
- Building societies
Definition of a Bank
A bank is a commercial institution which performs various financial activities, e.g.
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