How Do Financial Services Help A Nation In Its Economic Development?

Saving money is essential to accomplishing your set goals in the future. In the olden days, many people used to deposit their surplus funds in banks and earn interest on them. In today’s world, a variety of avenues are available to invest and grow your fund’s value. Financial services companies across the world offer a variety of financial products to individuals and companies. Before dwelling on how those services help your nation’s economy, we need to know what those services are.

The economy of a nation runs on the coordination of various sectors. One of them is financial services, which deals with money as a commodity. The companies engaged in this sector are non-banking financial companies, insurance companies, banks, brokers, investment companies, and credit and loan companies. Joseph Stone Capital is a pioneer in providing education on these services.

Insurance Companies

These are risk management companies that offer guaranteed financial security for individuals, families, and companies in the event of loss of property, death of a person, loss of business, etc. So, insurance firms provide annuities and insurance for properties, life, casualties, retirement, etc. Insurance firms also offer brokerage services for their customers who deal with other firms. They also offer reinsurance services, which are used by insurers to safeguard their losses.

Investment Banking Companies

Companies use these banks to trade bonds and stocks. Investment banks offer underwriting services to private and public funds. It guarantees financial payment in the event of financial loss or damage to a company. Investment banks also offer merger and acquisition services so that a company can buy or merge with another company.

It also plays an essential role in the risk management arena, such as detecting and preventing risks or making plans to overcome them. It also offers securities research, restructuring of companies to make them profitable or make a turnaround, and managing the investments of various companies.

Commercial Banks

These banks allow businesses and individuals to open accounts, accept deposits from the public, and offer loans to businesses, individuals, and organizations at reduced interest rates. They are stable financial services companies. The main functions of a commercial bank are to offer mortgage loans, commercial loans, and personal loans to individuals and companies. It also issues debit cards, credit cards, and checkbooks and provides interest to the account or deposit holders.

Commercial banks also allow quick transfers of funds between different or the same banks through demand drafts or electronic fund transfers. It also offers Internet banking services so that customers can perform a variety of services like fund transfers, depositing funds into fixed deposits, withdrawals of funds, etc.

It Helps The Economy Grow

Banks and other institutions support businesses so they can thrive and reap huge revenues. So, companies and businesses create jobs in various areas like IT, law, accounting, management, etc. The financial services sector alone offers 28% of jobs in a nation. It also helps in diversifying the capital market and eliminates monopolies from central authorities and government. It encourages investment and facilitates growth. So, higher levels of income for individuals promote consumption and support the economy.

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