FIN366 The Role of Financial Institutions in Financial Markets

FIN366 The Role of Financial Institutions in Financial Markets

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Financial Institutions/Financial Markets 1 The Role of Financial Institutions in Financial Markets FIN/366 The Role of Financial Institutions in Financial Markets Financial institutions are defined as those organizations that provide customers with various types of financial activities and services. This includes bonds, debentures, depositing,
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Financial Institutions/Financial Markets 2 hedging, insurance, investment, loans, portfolio management, retirement planning, risk diversification, stocks, and many other related functions. Financial markets facilitate the transfer of funds between investors and firms, accommodate firms that have excess funds and want to invest it, and accommodate investors who want to liquidate their investments to spend the proceeds or invest them in alternative investments (Financial Markets and Institutions). This paper will discuss three major financial institutions and describe the markets in which they are involved with. Classifications of Financial Institutions There are two major classifications of financial institutions deposit type institutions and non-deposit institutions. Deposit type institutions accept and manage deposits. Institutions such as commercial banks, credit unions, and mutual savings banks are listed under this classification. These types of institutions take deposits from savers to lend to borrowers; the money account holders deposit is what they are entitled to and at the same time earns interest on savings accounts (Ong, 2011). Non-deposit type institutions serve as intermediaries between borrowers and savers. Institutions such as insurance companies, investment banks, and mutual funds are
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This note was uploaded on 08/22/2011 for the course BUS 415 taught by Professor Barnes during the Spring '11 term at Coastal Carolina University.

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FIN366 The Role of Financial Institutions in Financial Markets

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