A.3 Function, purpose, and general structure of financial institutions Flashcards
Financial institutions that offer full banking services to individuals and businesses.
Think of where you go to deposit your paycheck.
Commercial Banks
Member-owned financial cooperatives that provide banking services, often at lower interest rates.
Similar to banks but owned by members
Credit Unions
Institutions that assist individuals, corporations, and governments in raising financial capital through underwriting or acting as the client’s agent.
Focus on investment services rather than deposits
Investment Banks
Firms that assist people in buying and selling securities and other financial assets.
Think of stock trading
Brokerages
Organizations that provide risk management in the form of insurance contracts.
Consider what protects you financially from losses.
Insurance Companies
Investment pools that pay for employees’ retirements.
Retirement savings collected by your employer.
Pension Funds
Investment vehicles made up of a pool of funds collected from many investors for the purpose of investing in securities.
Collective investments managed by professionals.
Mutual Funds
Private investment partnerships open to a limited range of investors.
Less regulated than mutual funds, often aim for higher returns.
Hedge Funds
Institutions that manage a state’s currency, money supply, and interest rates.
The Federal Reserve in the U.S. is an example.
Central Banks
Specialize in accepting savings deposits and making mortgage and other loans.
Specialize in accepting savings deposits & making loans.
Savings and Loan Associations
