Roles Played by Financial Institutions in an Economy Essay

Roles Played by fiscal Institutions in an Economy - Essay ExampleFinancial Institutions play a very important role in the economic system by the provision of mixed financial instruments (Frank, 2003). Different types of Financial Institutions provide different function to its members or clients. For example, Banks provide such services as mortgages, loans, and credit cards while on the other hand a financial organisation such as Insurance Firms provide services such as insurance services, securities and buying and change services of real estate. These financial institutions, however, interconnect with one another to provide different roles in the economy. virtually of the major roles of Financial Institutions are discussed in this essay as follows.The first major role of financial institutions in the economy is that the financial institutions motivate the financial sector of the economy. Financial institutions such as banks in most cases will use the resources that they witnes s to benefit themselves (Sera, 2005). They will use these resources to make profits for themselves and for their own growth. This is however helpful to the economy of a country as there will be an ontogenesis in the business of investing when these financial institutions grow. This because there will be a boost in the financial instruments such as an increase in the number of loans that a bank can communicate to an individual or to other companies. With the growth of these financial institutions, the financial sector of the economy becomes motivated and the economy of the country is strengthened.The second role of the financial institutions in the economy is that the financial institutions will introduce and damp Niche strategies.