Financial services is a broad sector that encompasses everything from banks and investment firms to insurance agencies and credit-card companies. The industry helps with the making, investing and management of money for both people and organisations, like businesses and governments. It provides the vital link between investors and entrepreneurs looking to expand their operations and individuals who need a loan or mortgage for a home.
Financial institutions help manage the amount of money in a country’s economy by controlling liquidity through repo rates, participating in open markets and setting cash reserve ratios. They also provide various lending facilities such as factoring, credit cards and hire purchase finance. This allows companies to access funds for expanding their business and makes them a key barometer for economic health.
Besides lending, financial services include other things such as stock markets and commodity exchanges that allow investors to buy and sell shares and bonds. They also offer debt-resolution services, which can involve taking on a debt on behalf of someone else (such as a family member), or helping them get out of it. They also deal with the movement of funds between different countries through foreign exchange and payment systems.
In other words, financial services are the backbone of any economy. Without them, businesses and consumers would have trouble getting the capital they need to grow and flourish. This is why it’s important for financial services to be well-regulated, so that they can act with integrity and work to meet societal expectations.