The Financial Services Sector
The financial services sector encompasses a wide range of businesses. It includes banks that offer checking and savings accounts, credit unions, and credit card companies, and it also includes investment firms such as mutual fund and stock brokerage houses. It is also home to insurance carriers that provide life, health, property and other types of coverage. Other members of this sector include reinsurers that sell insurance to insurance companies to help protect them from catastrophic losses, and credit rating agencies.
Governments regulate financial services because they are important to the economy and because trust must be maintained between savers and borrowers. For example, people who buy life insurance expect that the company they purchase it from will be around to pay their designated beneficiaries after they die. In addition, people who deposit their money with a bank or other financial institution expect that their funds will be safe and available when they need them.
A healthy financial services sector allows millions of people to put their money to work. They are able to obtain loans for homes, cars, education, and other needs. They are able to save for retirement and other goals, and they can secure their financial well-being with life and property insurance. Increasingly, these sectors are making strides toward financial inclusion, providing access to banking and other financial services to the world’s poorest people. In doing so, they are helping families and communities have a chance at better lives.