Financial Services – The Economic Service Sector
The financial service industry encompasses a broad range of businesses that manage money, including banks, credit unions, insurance companies, brokerage firms, consumer finance firms and investment funds. These businesses are highly regulated to ensure consumer protection and protect the stability of the financial system.
Several functions are performed by financial services in order to promote economic development and improve living standards of consumers. These functions include mobilizing funds, promoting investments, protecting savers from debt and improving access to credit for large purchases.
Raises Standard of Living: The strength of the financial services sector is essential to the prosperity of a country’s economy. This is because consumers generally earn more when the economy and sector are strong, which boosts their confidence and purchasing power.
Maintains Liquidity: Financial services are necessary for maintaining sufficient funds in an economy, as people typically use them to make short-term purchases such as a car or a vacation. This helps the economy operate efficiently and also promotes economic growth by enabling people to invest and grow their businesses.
Regulatory Framework: The financial services industry is subject to national and international regulation. These regulations include the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.
The financial service industry provides services to individuals, businesses, and governments. It is an important part of the economic fabric that supports both the United States and global economies.
The production and supply of financial services must be conducted simultaneously, as they tend to perish. This means that firms must work hard to develop a positive brand image in a competitive environment. Moreover, they must constantly remain in touch with their customers so that they can design products that will meet their needs.