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    Role of Financial Institutions

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    Write a paper describing at least three major financial institutions.

    Describe possible markets those institutions, such as those in the following list, are involved with and explain interactions among them.

    Cite at least two sources.

    Commercial banks
    Insurance organizations
    Investment banks
    Pension funds
    Mutual funds
    Underwriting stock or bond insurance
    Insurance products

    Format your paper consistent with APA guidelines

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    The first major financial institution that I describe is the commercial bank. These banks accept deposits and use those funds to provide credit. There are different ways in which the commercial banks provide credit. They invest through capital markets, or directly lend money to customers. The markets in which the banks operate are the market for funds, where firms, and individuals that have extra funds are transferred by the bank to those entities and individuals that need funds. Currently, the law does not allow the same bank to deal both with the capital markets as well as lend to entities. So, commercial banks accept deposits and give loans to large corporations and businesses. The investment banks limit themselves to stock market activities. These banks interact in several markets. They process payments, issue bank drafts, bank checks, lend money by overdraft/cash credit/long term loans, provide letters of credit, guarantees, and allow safekeeping of documents(Madura. J, 2010),. They interact with other financial intermediaries when they underwrite bonds, make markets in currency and provide private equity financing. Currently, there is a market for checking, savings, and ...

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