What is a financial institution (the influence of finance on personal life)

Financial institutions are organizations specializing in financial activities. In the modern market economy, all kinds of monetary movements, credit relations and financial market activities are inseparable from it. Financial institutions cooperate with each other to form a financial institution system with overall functions. The system of financial institutions in various countries is generally composed of central banks, commercial banks, specialized banks and banking financial institutions. The system of international financial institutions includes global and regional financial institutions.

Definition and classification of financial institutions

Definition of financial institutions

Financial institutions are organizations specializing in financial activities. They usually use a certain amount of their own funds as capital, and form a source of funds by absorbing deposits and issuing various securities. And in the process of providing various financial instruments and services to the society, we use funds to make profits in the form of loans and investments. Financial institutions and general economic units are both * * * and special. Its * * * nature is mainly manifested in having the basic elements of a general enterprise. Those who have certain self-owned capital and provide specific goods and services to the society must operate according to law, conduct independent accounting, be responsible for their own profits and losses, and pay taxes according to regulations. Its particularity is mainly manifested in the following three points.

1. The business object and business content are different. The business object of general economic units is commodities or ordinary services with certain use value, and the business content is mainly engaged in commodity production and circulation activities; The business object of financial institutions is monetary fund, a special commodity, and its business contents include monetary receipt and payment, lending and various financial businesses related to or associated with monetary movement.

2. The principles of business relations and activities are different. The relationship between general economic units and customers is the sale of goods or services, and their economic activities follow the principle of equivalent exchange; The relationship between financial institutions and customers is mainly the borrowing or investment of monetary funds, and their economic activities follow the principle of credit.

3. Different operational risks and impacts. The business risks of general economic units mainly come from the process of commodity production and circulation, mainly in the correctness of commodity production and sales. This kind of risk brings the most bankruptcy because the goods are unsalable and insolvent. The losses caused by the bankruptcy of a single enterprise have little impact on the overall economy, and they are generally small and individual. However, because the business of financial institutions is mostly monetary credit business with the condition of repaying principal and interest, its risks mainly include credit risk, bank run risk, interest rate risk and exchange rate risk. The consequences of this series of risks often exceed the impact on financial institutions themselves; The crisis of certain financial institutions due to poor management may pose a threat to the stable operation of the whole financial system. Once the systemic risk occurs, it will lead to the failure of the financial system, which will inevitably endanger the whole social reproduction process in the modern monetary economy, lead to the chaos of the social and economic order, and even lead to a serious social or political crisis.

Classification of financial institutions

Financial institutions can be divided into different types according to different standards.

1. According to the main business categories of financial institutions, it can be divided into: banking financial institutions and non-banking financial institutions. The former mainly focuses on deposits and loans, including central banks, commercial banks and specialized banks. The main source of funds for the latter is not to absorb deposits, but to provide various financial instruments or specific contracts to raise funds and use them in a special way, mainly including insurance companies, trust and investment companies, securities companies, finance companies, leasing companies and so on.

2. According to the business nature of financial institutions, they can be divided into commercial financial institutions and policy financial institutions. The former aims at maximizing profits, and is an independent, self-financing, self-balancing and self-developing financial enterprise. The latter is established by the government to strengthen its ability to intervene in the economy and ensure the sustained, stable and coordinated development of the national economy. Most of these institutions are funded by the government, mainly government capital, not for profit, and their business is closely coordinated with the government's industrial policy.

3. Financial institutions can be divided into domestic financial institutions and international financial institutions according to their geographical scope. The former refers to all financial institutions whose business areas are within a country; The latter can be divided into global and regional. It should be noted that international financial institutions can also be divided into commercial financial institutions and policy financial institutions according to their business nature. Commercial institutions refer to for-profit financial institutions such as multinational banks, multinational banks and group banks; Policy institutions refer to intergovernmental international financial institutions.

In addition to the above, financial institutions have other classification basis. For example, according to their functions, they can be divided into managerial financial institutions that manage and regulate financial activities and operational financial institutions that operate financial services; According to the scale of capital and the number of employees, it can be divided into large, medium and small financial institutions; According to the way of organization and management, it can be divided into company system, cooperative system and state-owned financial institutions; According to the country of investment, it is divided into domestic financial institutions, foreign financial institutions and joint venture financial institutions. It should be pointed out that in reality, a financial institution often owns several kinds of property at the same time. For example, commercial banks belong to both banking financial institutions and commercial financial institutions, and may also be domestic banks or multinational banks. It can be said that all kinds of financial institutions are interrelated and mutually restricted. Therefore, classification should not be viewed in absolute isolation.

Second, the position and role of financial institutions in the modern economic system

As an organization engaged in financial activities, its position and role in the modern economic system are very important.

1. Financial institutions are the general hub of a country's capital activities. By raising funds, they guide the flow of funds and support economic development.

The contradiction between capital supply and demand has always existed in modern economic activities. Financial institutions make use of their diverse types and huge branches to adjust by carrying out asset-liability business: sporadic, scattered and idle funds are raised to become efficient and stable long-term sources of funds. At the same time, according to China's economic and financial policies, we will invest in departments that are in urgent need of funds to ensure the rational flow and use of funds and support the coordinated development of the economy.

2. Financial institutions are the lever for a country to regulate and manage economic activities, and the guarantee for the healthy, orderly and stable operation of an economy.

Financial institutions are the link between all sectors of the national economy and the "thermometer" that reflects national economic activities. Through the operation of financial institutions, government departments can have a direct or indirect impact on all sectors of the national economy, which is conducive to the realization of government intentions. A government requires financial institutions to be set up reasonably, managed scientifically and operated effectively, so as to smoothly realize the macro-financial regulation of the central bank and the efficient micro-financial operation of financial institutions such as commercial banks, and finally achieve the goal of stable financial, economic and social development.

Third, the general structure of modern financial institutions.

The modern financial institution system is gradually formed with the development of commodity economy. At present, the overall composition of countries is: with the central bank as the core, commercial banks as the main body, and various professional banks and non-bank financial institutions coexist.

central bank

The central bank is a special kind of bank in the financial system of various countries. It is "special" in that it is a non-profit organization specializing in macro-control and financial management. As an issuing bank, a bank and a national bank, it has become the core of a national financial system. The central bank formulates and implements monetary and financial policies on behalf of the state, supervises financial institutions and financial markets according to law, and maintains the safe operation of the financial system.

commercial bank

Commercial banks are financial institutions that mainly deal in industrial and commercial deposits and provide customers with various services. Because they take deposits as their main liabilities and have the functions of creating deposit currency and circulating deposit market through transfer settlement, they are usually called deposit currency banks. Because of its large number of institutions, wide business coverage and large proportion of total assets, commercial banks have become the backbone and main body of the financial institution system, occupying a prominent position.

specialized bank

Specialized banks are banks that specialize in business and provide specialized financial services within the prescribed scope. It is a manifestation of the development of social division of labor in the financial industry. There are many types and forms of specialized banks. There are mainly the following types:

1. investment bank. Investment banks are banks that provide investment and long-term credit services for industrial and commercial enterprises. This name is commonly used in most industrialized countries, such as Europe and the United States. Britain is called a commercial bank, Japan is called a securities company, and other countries and regions are also called long-term credit banks, industrial banks, finance companies, investment companies and so on. Investment banks mainly rely on issuing their own stocks and bonds, with a few loans from other banks and deposits allowed by some countries. The main businesses of several banks are: direct investment in stocks and bonds of industrial and commercial enterprises; Provide medium and long-term loans; Issuing and underwriting securities for industrial and commercial enterprises; Participate in the establishment and reorganization of enterprises; Underwriting domestic and foreign government bonds; Handling foreign currency deposits and transactions; Provide financial consulting services for investment and mergers and acquisitions.

2. savings bank. A savings bank is a financial institution that specializes in handling residents' savings and providing financial services to individual residents. This kind of bank takes savings deposits as the main source of funds, and its business is mainly to provide consumer credit and residential loans, as well as investment activities. All countries have public and private savings banks, which have different names, such as mutual savings banks, national savings banks and credit associations.

3. Mortgage bank. Mortgage banks are banks that engage in long-term loans with real estate as collateral. Its main fund comes from issuing real estate mortgage securities. Its business belongs to long-term credit, which can be roughly divided into two categories: one is to apply for long-term loans with land as collateral, and the loan target is land owners or agricultural entrepreneurs who buy land; The other is a long-term loan with urban housing as collateral, and the loan target is the owner of the house or the entrepreneur who runs the construction industry.

4. Development banks. Banks that specialize in meeting the investment and financing needs of long-term construction projects and providing services. This kind of investment and financing is a policy bank because of its large investment amount, long time, slow effect and high risk. Although it is developmental, ordinary commercial banks are unwilling to bear it. Its operating characteristics are not for profit, mainly financial banks. The sources of funds for development banks are mainly financial transfer funds and other financial funds. Its business is mainly to provide long-term loans to domestic enterprises and construction projects.

5. Agricultural Bank. Established specifically to support agricultural development. Because agricultural credit also has the characteristics of high risk, long term and low income, it is mostly established by the government and is also a policy bank. Its main sources of funds are borrowing government funds and issuing bonds. The main business includes agricultural loans, guarantees and subsidies. These loans cover almost all the capital needs of agricultural production, including agricultural low-interest loans and special policy loans.

6. Export-Import Bank. A bank that specializes in providing international financial services such as foreign trade and non-trade settlement and credit. Most of them are official or semi-official policy banks, and their funds mainly come from government funds. Their business purpose is to promote the development of domestic import and export business and implement their government's foreign economic policies. Because the government has to bear the risks that private exports and general financial institutions are unwilling or unable to bear when exporting goods, and enhance the country's export competitiveness through preferential export credit, such banks have a strong policy color in their operating principles and loan interest rates.

Non-bank financial institutions

Non-bank financial institutions are the general name of financial institutions other than banks, with various types and names. Here is a brief introduction to the main types:

1. Insurance companies are financial institutions specializing in insurance business. The purpose of insurance is to spread risks, that is, to establish economic relations through insurance contracts and give economic compensation to the insured who has an accident. The funds of insurance companies come from the insurance premiums paid by the insured or the issuance of life insurance policies. In addition to retaining some funds to meet the demand for compensation, the rest are mainly invested in long-term securities such as government bonds. The insurance funds accumulated in the form of insurance premiums are stable and considerable, and have become an important source of funds in the financial market. Insurance companies are divided into property insurance companies, life insurance companies, fire and accident insurance companies and deposit insurance companies. Among them, life insurance companies are generally the largest.

2. Trust and investment companies. Financial institutions specializing in trust or trust investment business. Its main business includes operating funds and property trusts, acting as an agent for asset custody, financial leasing, economic consulting, securities issuance and investment. The investment activities of trust and investment companies are as follows: raising funds by issuing stocks and bonds, and buying bonds and stocks of other companies, and then issuing new investment trust securities with the purchased securities as the guarantee. Financial trust industry plays an important role in broadening financing channels and perfecting credit system.

3. Credit cooperatives. It is a cooperative financial organization. Generally, the scale is not large, and the members have a specific scope, such as rural farmers' credit cooperatives and urban craftsmen's credit cooperatives. Its funds come from the capital stock and deposits paid by members, and the loans are mainly used to solve the capital needs of members.

4. Financial companies. It is a non-bank financial institution that operates part of banking business. The main business is to absorb time deposits, rent durable goods or sell them in installments. There is little difference between large financial companies and investment banks, and they can also engage in foreign exchange, joint loans, underwriting securities, real estate mortgage and financial consulting. There are also some financial companies that only rely on bank loans and their own funds to carry out business and do not absorb deposits.

5. leasing company. A financial institution that plays a financing role by melting things. For the lessee, the essence of leasing is to obtain equipment loans in disguise; For the lessor, leasing can recover the funds faster and is safer than direct loan. There are generally three kinds of leasing companies: banks, manufacturers and independent operators. They have a wide range of business and flexible management methods.

6. Retirement or pension funds. The fund is made up of a fixed percentage of wages paid by employers and employees on time according to law, and employees can enjoy pension funds from the fund after retirement. The main investments of the fund are public bonds, real estate mortgage loans, corporate bonds and stocks.

7. Securities institutions. Financial institutions specializing in securities business, including securities companies, stock exchanges, securities registration and settlement companies, securities investment consulting companies, fund management companies, securities appraisal companies, etc. The first three types of institutions are the main institutions in the securities market. They have their own responsibilities to support the daily operation of the securities market.

8. Pawnshop. It is a financial institution that provides temporary pledged loans in the form of physical possession transfer. The essence of pawn relationship is money and credit with pledge as the condition. Pawnshop is a special financial enterprise that does not engage in credit lending, currency exchange, remittance, investment or intermediary activities.