Financial services are all the ways we manage and exchange money. This includes everything from banks and credit unions to brokers and mortgage lenders. It also encompasses insurance companies, securities traders and financial advisors.
The financial sector is important to the economy because it helps people make big purchases and save for the future. It also provides loans and credit to businesses, allowing them to grow. A strong financial sector can boost a nation’s economy, while a weak one can sink it.
Banks are the backbone of the financial industry. They collect savings from depositors and then lend them out to borrowers. They earn revenue through fees, commissions and other methods, like the spread of interest rates between loans and deposits.
Other types of financial services include investment firms and brokerages. These companies buy and sell assets like stocks, bonds, options and mutual funds. They also offer advice on how to invest your money.
Another aspect of financial services is the factoring and forfaiting industries. These companies help promote the sale of goods in domestic and foreign markets. The presence of these industries ensures that there is more trade in the country, which leads to economic development.
Other financial services include hire purchase, leasing and housing finance companies. These companies allow consumers to purchase expensive items such as cars, houses and other amenities with the help of credit. They also encourage savings through regular instalments. This leads to the tertiary sector of a country growing which in turn results in more employment opportunities.