Daily The Business

Financial institutions and markets

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Shagufta Iqbal

Financial institutions are firms that provide financial advice and services to their clients. These financial institutions and markets are generally regulated by financial laws of government authority. Below are the types of financial institutions which will be discussed: Commercial banks are those financial institutions which provide services such as auto loans, mortgage lending, giving business and accepting deposits. They also deal with savings accounts and certificates of deposits which are basic investment products. The facilities provided include safe deposit boxes, ATMs, vaults and bank tellers. Credit Unions are known by various names around the world, such as not-for-profit, financial cooperative. Unlike other institutions, Credit Unions are established and operated by members. In this type of arrangement, the profits are shared among the members and there is no specific standard for credit union. Stock brokerage firms are responsible for facilitating buying and selling of financial securities among the buyer and seller.
The firm provides clientele of investors and employs several stockbrokers through whom they trade public stocks and securities. Once the transaction has been successfully completed, the brokerage company receives compensation, which is by means of a commission.
Asset management firms are beneficial as they provide investors with more investment options than they would have by their own as they have a wide variety of resources.
The company will invest the pooled funds of its clients into securities that match declared financial objectives.
These firms manage hedge funds, mutual funds and pension plans. Service fees or commissions may be charged or a percentage of total asset under management. In an insurance company a contract is signed which is represented by a policy and provides an entity/individual with financial protection/reimbursement against any losses to be occurred in future. This is instrumental as a means of protection of financial losses, both major and small resulting from damage to insurer or his/her property. Insurance policies include health insurance, vehicle insurance, home insurance and life insurance.
Also, other services include securities, buying or selling of real estate, mortgages, credit cards and check writing. Finance companies are defined as an organisation which provides loans to businesses as well as consumers. A finance company is like a bank as it acts as a leading entity by extending credit. Finance companies get their funding from banks and other resources, it then extends credit to companies for commercial use and to individuals to make various purchases. Retailer sells goods directly to consumers with an aim of earning a profit, so it is done through different distribution channels.
Retailers vary in sizes ranging from small family operated stores to big supermarkets. Large retailers buy directly from manufacturer and sell products to end users at marked up price. Retailers mainly act as a link between wholesaler and consumer. Financial Institutions generally act as intermediaries between capital and debt market. Financial Institutions are also responsible for transferring funds from investors to companies.

The writer is a student of Comsats University Lahore.

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