Financial services is a broad term that refers to a wide range of businesses, from banking and investments to insurance and money management. The financial services industry is vital to our everyday lives.
Banks and other financial institutions provide credit and loans to consumers. This allows them to purchase goods or pay for utilities. Additionally, they provide advice to companies on mergers and takeovers. They also provide a safety net for producers by minimizing their risks.
Companies in the financial services sector are responsible for protecting the money people deposit with them. Their services are regulated by government laws. While some companies are for-profit, others are nonprofit.
These companies may be located in national or international financial centers. They are also commonly clustered in local or regional financial hubs.
Many community-based nonprofits provide counseling and money management advice. Various types of financial services include insurance, mortgage inspection, and appraisal.
The insurance industry is a key sub-sector of the financial services industry. Insurance companies offer products for protection against liability, property damage, and death.
In addition, they offer various kinds of savings. By providing insurance, these companies can help minimize the risks of producers and consumers.
When there is a shortage of funds, the capital market suffers. Producers must invest more to meet consumer demand. However, lenders tighten lending, which causes the capital to dry up.
When the system fails, consumers stop spending. This can lead to a recession. It can also cause unemployment.