Financial institution

"Banking institutions" redirects here. For banks as financial institutions, see Bank.
The oldest financial institution in the world, Banca Monte dei Paschi di Siena, founded in 1472.

A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial institution:[1][2]

  1. Depository institution – deposit-taking institution that accepts and manages deposits and makes loans, including bank, building society, credit union, trust company, and mortgage broker;
  2. Contractual institution – insurance company and pension fund
  3. Investment institution – investment bank, underwriter, and other different types of financial entities managing investments.

Financial institutions can be distinguished broadly into two categories according to ownership structure:

Some experts see a trend toward homogenisation of financial institutions, meaning a tendency to invest in similar areas and have similar business strategies. A consequence of this might be fewer banks serving specific target groups, and small-scale producers may be under-served.[3] This is why a target of the United Nations Sustainable Development Goal 10 is to improve the regulation and monitoring of global financial institutions and strengthen such regulations.[4]

  1. ^ Siklos, Pierre (2001). Money, Banking, and Financial Institutions: Canada in the Global Environment. Toronto: McGraw-Hill Ryerson. p. 40. ISBN 0-07-087158-2.
  2. ^ Robert E. Wright and Vincenzo Quadrini. Money and Banking: Chapter 2 Section 5: Financial Intermediaries.PDF. Accessed July 24, 2012.
  3. ^ Jayati Gosh (January 2013). "Too much of the same". D+C Development and Cooperation/ dandc.eu.
  4. ^ "Goal 10 targets". UNDP. Archived from the original on 2020-11-27. Retrieved 2020-09-23.