Definition of financial industry
The financial industry is a company that operates and operates in the financial sector and includes all activities related to the economy to provide services to every market participant. Everything related to money is the main job of the financial industry. Several private or national companies engaged in finance are banks, credit institutions and pawnshops. With these companies, market participants can carry out various economic activities, such as increasing capital for companies, securing purchases of goods with debt and interest, and risking assets that can later be exchanged for additional interest.
The financial industry consists of organizations that manage money, particularly companies that provide money management, investment, asset issuance, lending, and financial services. There are several types of these institutions; this includes financial advisors, financial institutions, investment bankers, stock exchanges, credit card issuers, etc.
The global financial industry has experienced a severe financial downturn over the past few decades. An example of such a decline is the stock market decline in 2002. The global stock market experienced a sharp decline that year. This was due to the collapse of certain companies, which resulted in the bankruptcy of many internet companies.
When we talk about the financial industry, it is basically influenced by another risk reward analysis that looks at a company's earnings potential, risk rating, money supply, interest rates, inflation, and more. A big player in the financial sector is Citigroup. JPMorgan, BOA and others. All of these companies combined had more than $257 billion in profits as of 2006. But the 2008 financial crisis cost them about a third of that money. Some of the best players right now are at the top with government support.
How the financial industry stabilizes the country's economy
With the financial industry, economic activity can continue. For example, the business will continue and develop after the business people apply for a loan from the bank and the application has been received by the bank, whose approval has been approved by both parties. In this way, entrepreneurs can continue their business and get more profit from bank loans, while banks benefit from interest paid regularly by debtors. Due to this relationship, the economic chain in a country continues between financial companies and market participants, which is mutually beneficial.
What are the services provided by the financial industry?
In addition to providing a number of funds that can be borrowed and paid by debtors with additional interest, financial industry companies also provide other types of services. For example, you can propose a business plan with a company expert, manage a pension fund for allocation to a particular company or system with minimal or moderate risk depending on customer demand, and manage customer savings funds for long-term use. Variations in terms according to the programs and promotions of financial companies such as banks or insurance companies.
The financial industry in the modern world
The financial industry is increasingly dominating the economic activities of a country and the global financial system due to the very high velocity of money that arises from the increasing need of society to develop assets and capital to invest in different models to get the highest return on investment (ROI). ) in the future. The financial industry also influences macroeconomic indicators that support a country's economic growth and becomes a benchmark in viewing the prospects, potential and investment opportunities associated with fluctuations in the price of a country's currency. The more stable and increasing exchange rate of a country will have a positive impact on the financing of industrial productivity, where more funds and capital flows are managed, making the business and investment climate optimistic and absorbing jobs, per capita income from taxation and able to provide future benefits for owners. financial industry and the welfare of society in the future.
The importance of the financial industry
The global financial industry is very important to the world because we can do business effectively. They serve as a means of raising funds. Various financial instruments needed by institutional and individual stakeholders were used to conduct this fundraising. The financial industry is also known for its spread of funds. They help make investment decisions.
The financial industry also offers specialized services such as credit rating, venture capital financing, co-financing, inventory management and many others. After all, they make a significant contribution to economic development. This is done through the movement of savings from individuals with the sole purpose of flowing into productive investment. The financial industry has made remarkable progress in underdeveloped and developing countries, including the construction of roads and other infrastructure.