- Monetary Authorities – Central Bank
- Credit Intermediation and Related Activities
- Securities, Commodity Contracts
- Financial Investments and Related Activities
- Insurance Carriers and Related Activities
- Funds, Trusts, and Financial Vehicles
On the whole, financial institutions and insurance organizations provide their customers with access to capital, or conversely protect their capital from losing value through various methods.
A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays the interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity.
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. An important aspect of the insurance process is calculation of risk. Risk management can be described as the practice of appraising and controlling risk.
Types of financial investments include shares, other equity investment, and bonds (including bonds denominated in foreign currencies). These financial assets are expected to provide income or positive future cash flows. Still, the investments may increase or decrease in value over time.
Investments are often made indirectly through intermediaries, such as banks, mutual funds, pension funds, insurance companies. Though legal and procedural details, an intermediary generally makes an investment using money from many individuals, each of whom receives a claim on the intermediary.