Financial services are an important part of the economy. They help to ensure that companies can obtain the required funds for production and eventually earn more profits.
They also promote the growth of both domestic and foreign trade. They enhance the goodwill of companies by ensuring a constant flow of money in the capital market.
Banks and other banking firms offer a range of services such as accepting deposits, making loans and offering investment products such as shares and bonds. They also provide a range of insurance policies, which protect their customers from loss.
Loan associations provide a range of credit facilities for consumers, including mortgages and auto loans. Brokerage companies offer consumers investment opportunities in stocks, bonds and mutual funds.
These firms are usually part of larger financial conglomerates. They merge together to gain more earnings and to create a more diversified company.
Other sectors of the financial services industry include insurance, investment and private banking. Traditionally, each sector specialized in a particular area, such as banks, insurance companies or investment banks.
Over the years, the lines between these sectors have become increasingly blurred. For example, a bank may now also own an insurance company or an investment bank. The bank still maintains its own brand and customer base, but it can combine the two companies within its holding company to generate more earnings. It has to decide which approach is best for it and its customers.