The financial services industry provides a wide range of products and services that support healthy economies. It advances loans for businesses to grow, gives mortgages to people who want to own homes, and issues insurance policies that protect people’s assets. These activities create jobs and help people build savings for retirement.
The sector includes banks, credit unions, consumer finance companies, and even some nonprofit organizations that offer counseling or money management advice. Some of these groups specialize in specific areas, such as debt management for those who are struggling with debt, or home financing for first-time buyers. Other groups are broad in scope, such as investment banks, which assist companies with mergers and acquisitions by raising funds from investors.
A healthy economy requires a well-functioning financial sector, which promotes domestic as well as foreign trade. It increases the production of goods by facilitating the supply of required funds to companies. It also helps backward regions develop by providing fiscal and monetary benefits, such as cheaper credit, to encourage investments.
The sector is regulated by independent agencies that oversee different institutions to ensure transparency and fair treatment of clients. In some countries, these authorities are governmental, while in others they are private. These agencies can also impose taxes, set minimum capital requirements, and make other rules that govern the financial sector. This industry is lifecycle-based, which means it offers products and services that match customers’ needs at each stage of their lives.