Financial institution
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries. Most financial institutions are highly regulated by government.
Broadly speaking, there are three major types of financial institutions:[1]
1. Deposit-taking institutions that accept and manage deposits and make loans, including banks, building societies, credit unions, trust companies, and mortgage loan companies
2. Insurance companies and pension funds; and
3. Brokers, underwriters and investment funds.
Functions Of Financial Institutions
Financial institutions include banks, credit unions, asset management firms, building societies, and stock brokerages, among others. These institutions are responsible for distributing financial resources in a planned way to the potential users.
There are a number of institutions that collect and provide funds for the necessary sector or individual. On the other hand, there are several institutions that act as the middleman and join the deficit and surplus units. Investing money on behalf of the client is another of the variety of functions of financial institutions.
Financial institutions can be categorized as follows:
Deposit Taking Institutions
Finance and Insurance Institutions
Investment Institutions
Pension Providing Institutions
Risk Management Institutions
At the same time, there are several governmental financial institutions assigned with regulatory and supervisory functions. These institutions have played a distinct role in fulfilling the financial and management needs of different industries, and have also shaped the national economic scene.
Deposit taking financial organizations are known as commercial banks, mutual savings banks, savings associations, loan associations and so on. The primary functions of financial institutions of this nature are as follows:
Accepting Deposits
Providing Commercial Loans
Providing Real Estate Loans
Providing Mortgage Loans
Issuing Share Certificates
Finance companies provide loans, business inventory financing and indirect consumer loans. These companies get their funds by issuing bonds and other obligations. These companies operate in a number of countries. On the other hand, there are insurance companies that provide coverage for a variety of risk factors and they also provide several investment options. Insurance companies provide loans for a number of purposes and create investment products.
The functions of financial institutions, such as stock exchanges, commodity markets, futures, currency, and options exchanges are very important for the economy. These institutions are involved in creating and providing ownership for financial claims. These institutions are also responsible for maintaining liquidity in the market and managing price change risks. As part of their various services, these institutions provide investment opportunities and help businesses to generate funds for various purposes.
The functions of financial institutions like investment banks are also vital and related to the investment sector. These companies are involved in a number of financial activities, such as underwriting securities, selling securities to investors, providing brokerage services, and fund raising advice
Nationalized scheduled banks
First Women Bank Limited
National Bank of Pakistan
The Bank of Punjab
The Bank Of Khyber
Specialized banks
Industrial Development Bank
Zarai Taraqiati Bank Limited[1]
Punjab Provincial Cooperative Bank
SME Bank
Development financial institutions
Pak China Investment Company Limited, Islamabad
Pak Kuwait Investment Company Limited, Karachi
Pak Libya Holding Company Limited, Karachi
Pak Iran Joint Investment Company Limited, Karachi
Pak-Oman Investment Company Limited, Karachi
Saudi Pak Industrial and Agricultural Investment Company Limited, Islamabad
House Building Finance Corporation, Karachi
Investment Corporation of Pakistan, Karachi
Pak Brunei Investment Company Limited, Karach
Commercial banks
Allied Bank Limited Allied Bank of Pakistan
Bank Alfalah Limited
Habib Bank Limited
Bank Al-Habib Limited
Standard Chartered Bank Limited
City Bank Limited
United Bank Limited
Askari Bank Limited.
MCB Bank Limited.
Investment banks
BMA Capital Management Limited
Invest Capital Investment Bank Limited
IGI Investment Bank Limited
AMZ Securities
Orix Leasing (Pakistan) Limited
Trust Investment Bank Limited
Arif Habib Investment and Mutual Funds Co.
Discount and guarantee houses
First Credit & Discount Corp Limited
National Discounting Services Limited
Speedway Fordmetall (Pakistan) Limited
Housing finance companies
Asian Housing Finance Limited
Citibank Housing Finance Company Limited
House Building Finance Corporation
International Housing Finance Limited
Micro finance banks
NRSP Micro Finance Bank Limited
The First Micro Finance Bank Limited
Khushali Bank Limited
Karakuram Bank
Network Micro Finance Bank
Pak Oman Micro Finance Bank
Rozgar Micro Finance Bank, Karachi
Tameer Microfinance Bank Limited
Kashf Microfinance Bank Limited
Islamic banks
AlBaraka Islamic Bank (Merged into Al Baraka Bank (Pakistan) Limited[2])
BankIslami Pakistan Limited
Dubai Islamic Bank Pakistan limited
Dawood Islamic Bank Limited
Emirates Global Islamic Bank Limited (Merged into Al Baraka Bank (Pakistan) Limited[3])
Meezan Bank Limited-Premier Islamic Bank In Pakistan
Limitations of Financial Institutions
They dont set up the markets
ALL MARKETS first need natural buyers and sellers
ENVIRONMENTAL MARKETS often also need government action
Many PES systems involve only direct payments
E.g. government or company pays forest owners directly
Many markets are unattractive to the big banks
Small
Insufficient legal support
Borrowing is not always needed
E.g. some tax-based systems, much of cap & trade
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"People take only their needs into consideration, never their abilities".
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