Financial Institutions – Definition

Economics SSS 1 Third Term


Financial Institutions – Definition

Performance Objectives

Student should be able to:

  1. Explain the meaning and segments of the financial system.
  2. Identify the features of banking and non-banking financial institutions
  3. State the functions of each institution and its importance.


A financial institution is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange. Financial institutions encompass a broad range of business operations within the financial services sector including banks, trust companies, insurance companies, brokerage firms, and investment dealers. Virtually everyone living in a developed economy has an ongoing or at least periodic need for the services of financial institutions.

Financial institutions may be divided into two major groups; banking and non-banking financial institutions.

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