Types of Financial Services

Financial services are a broad category of economic services that are provided by the finance industry. These services can be provided by a wide range of different businesses. They range from credit-card companies to banks and credit unions. They also include goods, loans, and investments. The finance industry employs many different types of people to provide these services.

Economic services provided by the finance industry

The finance industry provides a number of economic services that benefit consumers and businesses alike. For example, it enables the consumers to purchase consumer goods on hire purchase or lease and offers reinvestment options for those who wish to grow their savings. Governments also utilize the financial services of the finance industry to raise funds through the money market. Governments purchase Treasury Bills, which are sold by commercial banks to individuals and businesses.

Goods

Financial services involve transactions between consumers and companies. In the business world, these transactions provide consumers with a way to acquire the products they need to finance their activities. Financial goods include stocks, bonds, loans, commodity assets, real estate, and insurance policies. These products help a nation’s economy by providing free flow of capital and liquidity in the marketplace. They also help the economy manage risk.

Accounts

Accounts are a type of record-keeping activity that has many applications in the financial services industry. One type of account is a bank account, which is an arrangement between the bank and a customer. These accounts are used to store money, such as savings, and make it easier for the customer to access them whenever they need to. Others are retirement accounts, which allow customers to earn interest on money they have saved.

Insurance

Insurance services provide protection for people and property against death and injury, property loss, and liability and lawsuits. There are many different types of insurance services, including annuities, health and life insurance, automobile and homeowner’s insurance, and property and casualty insurance. Some companies also sell reinsurance, which helps insurers protect themselves from catastrophic losses.

Pooling of risk by underwriting

Underwriting is a process by which an insurance company groups a group of similar risk exposures together and computes potential future losses. Insurers use various forecasting techniques, depending on the type of risk exposures and the distribution of losses. As more risk exposures are pooled together, their ability to predict future losses improves. The overall result of this process is a decrease in the amount of risk faced by society.