As the main goal of their activities, financial institutions consider the attraction of free funds of citizens and the provision of funds on loan to those who need them.
- Banks;
- insurance companies;
- pension funds;
- credit unions;
- investment funds, trust management companies of investors' funds;
- brokerage companies;
- dealer companies;
- Stock exchanges.
We will start considering the activities of financial institutions with banks, because the services of these financial institutions are most in demand among the population.
The main activities of banks include:
- credit services (granting loans for various purposes);
- settlement operations (making the necessary payments on behalf of holders, depositors, etc.);
- cash transactions (acceptance and disbursement of funds and valuables through the operating cash desk);
- commission operations (issuance of orders to the bank's clients for transactions related to purchase and sale);
- exchange rate transactions (purchase and sale of foreign currency and securities);
- financial transactions.
Note!
Banking organizations also include special clearing institutions and leasing companies.
Clearing is a system of non-cash settlements between countries and companies.
Clearing Institutions provide their clients with guarantees for the timely settlement of settlements, the transmission of settlement and monetary documents, and account statements.
A leasing company acquires ownership of a specific property and transfers it for use to a third party for a long time for a fee. At the same time, the recipient of the property has the opportunity to redeem this property, paying for it in installments (in installments).
Depending on the role and purpose of accumulating household savings, non-bank credit and financial institutions can be:
- insurance companies;
- pension and charitable foundations;
- credit unions;
- investment companies;
- savings and loan associations;
- financial companies.
Insurance companies
form monetary funds at the expense of enterprises, organizations and the population, the funds of which are mainly intended for the payment of insurance compensation for damage in the event of certain events (insured events).
Pension funds are designed to organize the collection and accumulation of funds intended for the provision of pensions to citizens. In terms of the form of ownership, pension funds can be non-state and state-owned.
Charitable foundations
are usually not related to commercial activities. As a rule, they are aimed at solving humanitarian problems and supporting socially significant initiatives. Charitable foundations can finance education (universities, colleges, schools), research institutes, art centers, churches, various public organizations, as well as provide assistance to citizens in difficult life situations.
Credit unions
are established as cooperative organizations that accumulate the savings of their members and provide mutual credit. Citizens may be united in such unions on professional, religious, territorial or other grounds.
Investment companies stand out for the fact that, by issuing their own securities, they accumulate funds of the population and other investors, which they put into operation.
Savings and loan associations are organizations (credit institutions) whose main activity is to attract funds from the population for the purpose of long-term lending, purchase or construction of housing.
Financial companies specialize in lending to the sale of consumer goods. In addition, they can be established as separate structural units, branches, subsidiaries of banks, insurance companies and industrial firms producing consumer goods. Financial companies can apply various lending schemes, in some cases they can carry out leasing operations.
Companies engaged in financial activities as an intermediary are called brokerage companies.
A brokerage company is a company that buys or sells securities on behalf of clients. The brokerage company does not conclude transactions at its own expense.
The next type of financial organizations are dealer companies.
Dealers are companies or individuals who act as representatives between the manufacturer and the consumer.
In the field of stock and foreign exchange market, a dealer is considered as a commercial or state organization that formalizes the purchase and sale of shares on its own behalf and at its own expense.
A stock exchange is an organization that trades in a variety of securities.
The stock exchange organizes the supply and demand of various securities, and facilitates the conclusion of relevant transactions.
Note!
The Exchange itself and its staff do not make direct transactions with securities, but create the necessary conditions for their execution.
A currency exchange
is a place where foreign currency is freely bought and sold.
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