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Financial Institution (FI)

A financial institution (FI) is an organization that provides financial services to individuals, businesses, and governments. These services include accepting deposits, providing loans, investment management, and offering insurance products. Financial institutions are vital to the economy, facilitating capital flow, promoting savings and investments, and supporting economic stability. Common types of financial institutions include banks, credit unions, investment firms, and insurance companies, each playing a specific role in the financial system.

Example

A bank, as a financial institution, offers savings accounts, personal loans, and credit cards to consumers while also providing business loans and investment services to companies.

Key points

Provides essential financial services like banking, lending, and investment management.

Supports economic growth by offering capital and managing financial risks.

Includes diverse entities like banks, credit unions, and insurance companies.

Quick Answers to Curious Questions

They provide capital and financial services, facilitating investment and consumption, driving economic activity.

Financial institutions face credit risk, market risk, and operational risk, affecting their stability and profitability.

They offer tailored financial products that meet the borrowing, saving, and investment needs of their clients.
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