The Roles of Financial Services
When you think of Financial services, you probably think of banks, brokers and mortgage lenders. But this industry is much more than those three sectors. It also includes insurance companies, securities traders and investors, Wall Street and other investment firms and many others. This broad category provides individuals, small businesses, large companies and even governments with the financing they need to grow.
One of the main roles that Financial services play is to help create economic dynamism. This is because a thriving capital market is an indicator of a healthy economy. It allows companies to invest their profits back into the business, boosting production and allowing consumers to buy more goods and services.
Another function of Financial services is to provide a variety of payment options for consumers. For example, they enable people to purchase cars and homes by offering hire purchase and leasing agreements. They also allow people to save for retirement by offering mutual funds and pension plans. And they facilitate foreign exchange by providing money market and currency trading services.
Finally, Financial services also offer a wide range of risk management tools. These include insurance policies, which can cover the costs of unforeseen events like fire or flood. They can also protect against loss of income by offering life or disability insurance. And they can reduce the risk of a default on a debt by ensuring that creditors receive more than their initial investment if a borrower defaults.