Financial Institutions

• Definition:-
Institution which collects funds from the public and
places them in financial assets such as deposits,
loans , and bonds rather than tangible property such
as buildings.
• a financial institution is an institution that
provides financial services for its clients or
members.
 Financial Institutions
Broadly speaking, there are three major types of
financial institutions:
– Depositary Institutions : Deposit-taking institutions that
accept and manage deposits and make loans, including
banks, building societies, credit unions, trust companies,
and mortgage loan companies
– Contractual Institutions : Insurance companies and
pension funds; and
– Investment Institutes : Investment Banks, underwriters,
brokerage firms.
 Financial Institutions
• Financial institutions in most countries operate in a
heavily regulated environment as they are critical
parts of countries' economies.
• Regulation structures differ in each country, but
typically involve prudential regulation as well as
consumer protection and market stability.
• Some countries have one consolidated agency that
regulates all financial institutions while others have
separate agencies for different types of institutions
such as banks, insurance companies and brokers.
 Financial Institutions
Countries that have separate agencies include the United States
where the key governing bodies are :
• The Federal Financial Institutions Examination Council (FFIEC),
• The Office of the Comptroller of the Currency - National Banks,
• The Federal Deposit Insurance Corporation (FDIC) State "non-
member" banks,
• TheNational Credit Union Administration (NCUA) - Credit
Unions,
• The Federal Reserve (Fed) - "member" Banks,
• The Office of Thrift Supervision - National Savings & Loan
Association, State governments each often regulate and charter
financial institutions.
 Financial Institutions
• Countries that have one consolidated financial
regulator include:
• United Kingdom with the Financial Services
Authority,
• Norway with the Financial Supervisory Authority of
Norway,
• Hong Kong with Hong Kong Monetary Authority
and
• Russia with Central Bank of Russia. .