What are bank and non-bank financial institution, compare them briefly and explain each of them.

Essay by harsha83 September 2004

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"Warning: Saving May Be Hazardous to your Wealth"

Financial institutions such as banks, insurance companies and pension funds are also known as 'Financial Intermediaries'. They dominate the financial scene all around the globe. It is virtually impossible to spend or save or lend or invest money nowadays without getting involved with some kind of financial intermediary in one way or another. Although all have similar functions, yet they are different. They are as follow...

Banks versus Non-Banks - A Brief Comparison

A sharp distinction has been drawn between the commercial banks, on one hand, and all other financial institutions on the other, such as life insurance companies, property and casualty insurance companies, savings and loans associations, credit unions, mutual saving banks, mutual funds, and other types of nonbank financial institutions.

-Banks: according to Li and Kim (1987), "Banks facilitate trade and commerce by providing:

safekeeping for cash deposited in the current, savings and fixed deposit accounts

a convenient and a safe means of making payments through the current account, or by way of bank drafts, bank transfers and bills of exchange;

Finance in the form of loans, overdrafts or discounted bills of exchange;

Advice on financial investments or on the credit-worthiness of customers, local or abroad".

There are three types of Bank; Central Bank, Commercial Banks, and also Merchant Banks. The three will be described as the following...

Central Bank

The Central Bank controls the operation of the whole banking system in a country and carries out its monetary policy. Its chief functions are to issue, control and regulate the supply of money in the country; to act as a banker and financial adviser to the government; to act as banker to commercial banks; and to promote monetary stability and a sound financial structure in the country. Some examples of...