The Financial Services Industry

Categories : Gembing

Financial services

Financial services are economic services that encompass a broad range of business sectors. They include credit and insurance companies, mortgage lenders, banks and credit unions. This industry also includes a wide array of financial intermediaries that help channel cash from savers to borrowers and redistribute risk, such as brokers, money market funds, mutual fund companies, investment bankers and asset management firms.

In other words, a financial good is something that lasts (like a house or a car) and a financial service is the transaction that goes into acquiring that product. People could handle many of these transactions on their own, but it’s often more cost-effective and efficient to pay someone else to do them.

The financial services industry is critical to the health of the economy. When this sector is strong, it helps consumers spend and businesses invest. But if it’s weak, it can contribute to a recession.

The lines that separate the different financial services sectors are becoming blurrier. For example, an asset management firm may deal with both insurance assets and hedge funds even though they’re technically two distinct financial services sectors. This is partly due to rapid advances in technology.