Financial institution

Financial institutions, otherwise known as banking institutions, are corporations that provide services as intermediaries of financial markets. Broadly speaking, there are three major types of financial institutions:

Depository institutions – deposit-taking institutions that accept and manage deposits and make loans, including banks, building societies, credit unions, trust companies, and mortgage loancompanies;

Contractual institutions – insurance companies and pension funds

Investment institutions – investment banks, underwriters, and other different types of financial entities managing investments.

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

Commercial banks

Cooperative banks

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.