Research financial information and key performance indicators for your Fortune 500 Company.

Financial markets and institutions

University Phoenix

FIN/571

Professor

12 Apr 2021

Financial markets or institutions

A financial institution provides financial and monetary transactions to individuals and businesses. They deal with activities such as investments, deposits, and loans, among others. Financial institutions involve a wide range of business operations that offer financial services. They offer a wide range of products and services to businesses and individuals. The specific services offered depend on different types of financial institutions. The first financial institution is retail and commercial banks. Retail banks deal with products to retail customers. Commercial banks deal with deposits, business, mortgage, and personal loans, offer financial products, and checking account services (Gup, 2011). Most people bank with commercial banks. They offer financial services based on the policies set by Central Bank. The second financial institution is investment banks. It does not deal with deposits. The main goal is to help businesses and individuals. It is also involved with raising capital for governments. It deals with services that facilitate the operations of businesses, such as equity offerings. They also offer brokerage services. They also facilitate trading exchanges and mergers and acquisitions. They are also known as mutual fund companies. Funds from individuals are pooled together to provide them with access to a larger securities market approach.

The third financial institution is insurance companies. This is a non-bank financial institution that offers insurance to individuals and corporations. The main goal is to protect assets against any risk such as financial risk. Individuals and companies use insurance companies in protecting against any financial loss or unparalleled action (Gup, 2011). The fourth financial institution is a brokerage firm. They are investment companies and brokerages that provide investment services such as wealth management. They also provide investment products such as stocks and bonds.

How financial markets and institutions influence the U.S. and global economies

The first financial institution is retail and commercial banks. They provide specialized financial services hence reducing the cost of acquiring information on savings opportunities and borrowing. Retail and commercial banks have played a vital role in developing the U.S. financial services industry and financial markets. In the global economies, they have lowered search and transaction costs in the economy. They have also played a vital role in achieving economic development by allocating credit efficiently, reducing risk elements for businesses, and matching businesses and individuals' saving and investments. It has also helped expand the market by raising living standards and expanding the trade and commerce of an economy. The second financial institution is investment banks. Investment banks have influenced the U.S. economy by promoting business growth and financial development. In the global economy, it has increased consumer spending, international trade, and investment in capital spending, impacting the level of production of goods and services (Davis & Kim, 2015).

The third financial institution is insurance companies. In the U.S., insurance companies have helped in stabilizing the economy during the financial crisis. It has influenced the global economy in mitigating risk and protecting employees. It helps businesses in running successfully hence increasing more job opportunities. The fourth financial institution is a brokerage firm. It impacts the U.S. and global economy in rising market values. It influences consumers' and businesses confidence hence impacting the overall economy (Gup, 2011).

References

Davis, G. F., & Kim, S. (2015). Financialization of the Economy. Annual Review of Sociology, 41.

Gup, B. E. (2011). Banking and financial institutions: A guide for directors, investors, and counterparties (Vol. 615). John Wiley & Sons.