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 In financial economics, a financial institution acts as an agent that provides financial services for its clients or members. Financial institutions generally fall under financial regulation from a government authority. Common types of financial institutions include banks, building societies, credit unions, stock brokerages, asset management firms, and similar businesses. Financial institutions provide service as intermediaries of the capital and debt markets. They are responsible for transferring funds from investors to companies, in need of those funds. The presence of financial institutions facilitate the flow of money through the economy. To do so, savings are pooled to mitigate the risk brought to provide funds for loans. Such is the primary means for depository institutions to develop revenue. Should the yield curve become inverse, firms in this arena will offer additional fee-generating services including securities underwriting, and prime brokerage. Use Equity Multiples (as opposed to Enterprise Multiples). In order to consider how valuing a Financial Institution's balance sheet is different from a non-Financial firm. Consider how an industrials firm wields capital machinery (asset) and the loans (liabilities) it used to finance that asset. The line is blurred in Financial Institutions, which must hold deposit accounts (liabilities) to fuel the issuance of loans (assets). The same accounts are considered loans as they are held in ownership not of the bank, but of the individual client.
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Financial Institution Subcategories
Financial Institution Articles
Payment Protection Insurance: Do I Need It?
by Amanda Hash
Dec 22, 2008
Whenever you take a loan or apply for a credit card among the many offers you will receive, payment protection insurance is the most common one. You su...
Get a foothold on the property ladder
by Martin McAllister
Feb 07, 2007
As years go by, it seems to be getting more difficult for first time buyers to gain a foothold on the property ladder. In particular, young graduates and people on low incomes are finding it steadily harder to obtain a mortgage and buy their own...
The Mutual Survivors - Financial Institutions and Realty Investors
by steven markig
Apr 24, 2006
When it comes to, Real Estate Investments India currently one of the most exciting countries and is fast becoming the hottest country in Asia to invest in. A recent survey of the real estate ...
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