FINANCIAL INSTITUTION
These are institution which stands between surplus spending unit and deficit spending units.
These are institution which acts as a goal between transferring funds from those who have surplus to those who are spending.
THEY PLAY THE FOLLOWING ROLES
1. They transfer funds from those with surplus to those who are in need
2. They facilitate the pooling of risks.
3. They provide the public with more liquid and less risks on assets
4. They help to increase efficiency by applying special technology and other assistance in investment
5. They increase the liquidity of financial institution by giving loans.
FINANCIAL INTERMEDIARIES ARE CATEGORIZED INTO TWO
1. Banks
These are financial institution which provide short term loan, accept and maintain deposit, undertake less risk investment, create credit and their aimed at making profit.
2. Non banking financial institution (NBFIs)
These are institutions that carry out financial activities by their resources and are not directly from the savers as debt instead they mobilize the public saving for providing financial services.
Are institutions that provide banking services without meeting definition of bank for example development bank, life insurance Company, PPF, NSSF, Building society, post offices, saving banks etc.