Economics » Financial Institutions » Types and Functions of Financial Institutions

Introducing Financial Institutions

Financial institutions are the main channel by which funds flow from the sectors of the economy with surplus funds to other sectors with insufficient funds to ensure efficient utilization of such resources in the promotion of economic growth and development.

Financial institutions may be broadly divided into two groups – banking and non-banking financial institutions. The banking institutions include commercial and merchant banks, development banks, and the Central Bank. On the other hand, the non-banking institutions include insurance companies, equipment-leasing companies, hire-purchase companies, building societies, discount houses, etc.

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