Financial Institutions and Markets
There are many types of financial institutions, such as insurance companies and banks. Each financial institution has its obligation and mandate in the economic sector, and they help in the transferring of funds from various entities. On the other hand, financial markets also play an essential obligation in the commercial industry to ensure that the allocation and operation of a country’s economy is at equilibrium. The financial market generates income for the investors, thus making it able for the lenders to get funds, thus maintaining an economic cycle between investors and lenders.
There are various roles that the financial institutions play to ensure that create room for the provision of a wide variety of investments, lendings and deposits to businesses. The central bank is one financial institution that is essential in the process of managing other banks through perfect supervision and regulation of all other monetary institutions. Commercial and retail banks offer products to both retail consumers and business entities by providing deposit accounts and offering financial advice to respective demographics. Credit Unions provide their services according to a specific type of membership, such as the military and teachers. The associated members run credit unions, and the principal objective is to benefit them financially by offering loan services.
Financial markets play an essential role in the economy of a nation. They set a price equilibrium of various financial instruments that are exchanged between buyers and sellers. Fund mobilization is also enhanced by the financial markets, whereby the required rate of return in the market is determined by the prices of financial commodities at which they trade.
As a financial manager, financial markets and institution are very critical in helping a manager to make key decisions concerning an organization or a company. Financial managers need to analyze and evaluate financial markets and institutions to review financial reports, prepare accurate data based on financial forecasts and to come up with ways of increasing the profitability of a company.