Financial services

Financial services are activities that help people and organizations manage money, credit, risk, investments, and payments. The sector includes providers such as banks, insurers, investment firms, and payment companies.

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Commercial bank: A financial institution that accepts deposits and provides loans and payment services. Commercial banks combine deposit-taking, lending, and payments in one core business.
Fractional-reserve banking: A banking system in which banks hold only part of their deposits as reserves while extending loans. This framework explains how deposit-taking banks fund lending while retaining liquidity.
Mortgage loan: A loan secured by real estate, commonly used to finance a property purchase. Mortgage lending lets households and businesses finance property over extended periods.
Financial technology: Technology used to provide, improve, or automate financial products and services. Fintech is a set of tools and business models that can operate within or outside established providers.
Financial crisis: A severe disruption in financial markets or institutions that impairs credit, payments, or asset values. Failures and losses among providers can spread through credit and payment networks.
Insurance: A contract that transfers specified financial risks to an insurer in exchange for premiums. Insurers provide protection against losses that households and firms cannot easily absorb.
Credit creation: The process by which lending creates new deposit balances within a banking system. Bank lending can expand the money available for spending and investment.
Trade finance: Financial products and services that facilitate domestic and international trade transactions. Banks help importers and exporters manage payment timing, documentation, and counterparty risk.
Shadow banking: Credit intermediation conducted outside traditional deposit-taking banks, often with bank-like risks. It performs financial functions without the same institutional form as conventional banks.
Financial inclusion: Access to useful, affordable financial products and services for individuals and businesses. The sector’s reach determines whether people can save, borrow, insure, and make payments.