Q:

What are some examples of financial institutions?

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Quick Answer

Investopedia defines a financial institution as any establishment where the primary activity is fostering financial transactions. Because of this broad definition, there is a wide variety of financial institutions available, from large commercial banks to small credit unions.

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Full Answer

Commercial banks can be anything from a single-branch institution to a multinational corporation. Despite the size, most commercial banks tend to do the same sorts of financial transactions. They serve the consumer by allowing deposits that keep the customer's funds safe. They also provide business and personal loans, as well as act as intermediaries for payments between persons, organizations and even nations.

Investment banks and brokerages are also examples of financial institutions. Both handle investments, with investment banks dealing mostly with offering funds to other enterprises, while brokerages allow customers to invest in companies and commodities through the purchase of financial instruments. Financial institutions that offer the same services as banks without being considered banks themselves include savings and loans and credit unions. The main difference savings and loans have from banks is that their lending is restricted primarily to mortgages. Credit unions differ in that they must limit membership to specific organizations, such as a company or church, without being open to the general public.

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