Financial Institution (FI) is an umbrella term that refers to the collection of institutions that are active in the (private and/ or public) financial markets. The most common types of FIs are banks, insurance companies, and pension funds. Each type of FI has a different role in the economy, but all play an important part in providing capital to businesses and consumers.Banks are perhaps the most well-known type of FI. They provide loans to businesses and consumers, as well as offer savings accounts and other products such as credit cards. Banks also act as intermediaries between investors who want to buy securities and those who want to sell them. This function is known as "securitization."Insurance companies provide protection against risks such as accidents, illness, or death. They also offer investment products such as mutual funds and annuities. Pension funds invest money on behalf of workers who will eventually receive it when they retire. They usually invest in stocks, bonds, real estate, or other assets.
