Business entities include
non-financial and financial enterprises. Non-financial enterprises manufacture
products and provide non-financial services. Financial institutions deals with
financial related products for example, taking deposits from savers and giving
loans to deficit group who demanded such kind of financial assistance to
financial organizations. Financial enterprises, more popularly referred to as financial
institutions, provide services related to one or more of the following:- Transforming financial assets acquired through the market and constituting them into a different, and more widely preferable, type of asset, which becomes their liability. This is the function performed by financial intermediaries, the most important type of financial institution.
- Exchanging of financial assets on behalf of customers.
- Exchanging of financial assets for their own accounts.
- Assisting in the creation of financial assets for their customers, and then selling those financial assets to other market participants.
- Providing investment advice to other market participants.
- Managing the portfolios of other market participants.
Financial intermediaries
include depository institutions (commercial banks, savings and
loan associations, savings banks, and credit unions), which acquire the bulk of
their funds by offering their liabilities to the public mostly in the form of
deposits; insurance companies; pension funds; and finance companies.
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