Financial institutions. MEANING OF FINANCIAL INSTITUTIONS. Financial institutions refer to all business organizations which hold money for individuals and institutions and may borrow from them in order to give loans or make other investments.
importance of financial Institution
Financial institutions are very important for the economic development of a nation. They represent the main channel or medium by which funds can flow from lenders to borrowers.
- Explain the term financial institutions.
- List the different types of banking and non banking financial institutions.
- Identify the distinguishing features of banking and non-banking financial institutions.
Explain the functions of each institution and indicate its importance to Nigeria’s economic development
TYPES OF FINANCIAL INSTITUTIONS
Financial institutions may be divided into two major groups – banking and non-banking financial institutions.
The major difference between the banking and the non-banking financial institutions is that the liabilities of the banking institutions are counted as part of the total supply of money while those of the non- banking institutions are excluded from the money supply.
Banking financial institutions
- Commercial banks e.g. Zenith bank, GTB bank, Union bank, firstbank, UBA, Fidelity bank, Sterling bank, Eco bank, Unity bank, Access bank,
- Central bank
- Merchant banks
- Development banks
- Savings banks
Non-banking financial institutions include:
- Insurance companies
- Hire purchase companies
- Building societies