The financial services industry includes the collection of companies that intermediate and facilitate financial transactions. These companies are in the business of changing savings into investments, providing credit facilities like loans and credit cards, as well as offering insurance. This industry also includes investment banking, which underwrites debt and equity issues for companies seeking to raise capital. It also includes brokerage firms that buy and sell securities for their clients, as well as prime brokerage firms which offer exclusive trading services to high-net worth individuals.
The most important function of financial services is to mobilize the public’s savings and encourage them to invest it in productive enterprises for a higher rate of economic growth. This increases the gross domestic product (GDP) of a country.
Financial services help the poor section of society by providing them with various means of saving money and getting protection against some causalities. They also provide assistance to the business sector by providing them with the funds they require for their expansion.
A good quality of financial services is vital to the smooth functioning of any economy. It is one of the barometers that indicates whether a nation’s economy is healthy or not. The availability of good financial services provides the required boost to the primary, secondary and tertiary sectors to achieve a balanced economic development and generate more employment opportunities. It also ensures that the flow of funds is evenly distributed among the different sectors of a country.