Financial institutions are for-profit companies whose activity is providing financial services to the company’s economic agents.
Financial institutions’ services have become so sophisticated that it is often difficult to define their activity from depository and loan (classic banking services) to more modern and sophisticated services such as factoring or investment banking.
It has not stopped reinventing itself. Simply put, a financial institution is a company that provides services to its customers related to their money. Recently, companies are emerging that also perform these tasks. They are known as fintech companies.
The history of financial institutions dates back to ancient times. Already at the time of the Greeks, there were moneylenders in charge of these tasks.
In the mercantilist era, storing precious metals from South America created the need for a figure to provide custody services. It made the model of the first private banks.
Therefore, this is considered the gem of financial institutions as we know them today.
The banking system makes up of all the country’s banking institutions. It makes up of the Bank and the commercial and savings banks.
We Loan with House as Collateral
Commercial banking and savings’ main activity is to collect money from the public on deposit or in another way.
And also, use that money to grant loans in various forms or operations subject to market risks.
The types of finance that are independent of the banking system. Although they also capture resources from the public, their use varies according to their objectives.
Below are the different institutions that make up this type, as well as their objects.
Popular savings and credit banks. Its purpose is to carry out financing operations, in preference to small and micro-enterprises.
Popular Credit Boxes
Its purpose is to provide banking services to the Provincial Councils and District Councils and their municipal companies.
Its goal is to grant preferential financing to entrepreneurs of small and micro-enterprises in the rural productive sector.
Its objective is to act as a transfer agent and record operations or transactions in the commercial and financial field. They include surety and guarantee companies, factoring, and fiduciary services.
Financial Leasing Company
Its purpose is the acquisition of movable and immovable property to lease them to third parties.
Their purpose is to place securities issues, operate with transferable securities, and provide financial advice.
And also, its objective is to protect against risks for people and companies.
Financial institutions provide services as intermediaries in financial markets.
They are responsible for transferring coffers from investors to companies that need those funds. Financial institutions facilitate the flow of money through the economy, allowing savings to boost loans.
Financial institutions provide strength to the economic system and their diversity, which is increasing, implies the constant updating of the market.
And also, its transactions significantly facilitate the management of our savings and the connections that can establish your investment and growth.
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