Financial institution

Businesses that provide services as intermediates for various forms of financial and monetary transactions are known as financial institutions or banks. Financial institutions are also referred to in certain circles as banking institutions.

Some industry professionals believe that the majority of the world's financial institutions are moving in the direction of homogenization, which may be defined as a propensity to invest in comparable markets and pursue comparable business methods. It's possible that as a result of this, there will be fewer banks catering to certain target groups, which might leave small-scale companies unsatisfied. Because of this, one of the goals of Sustainable Development Goal 10 established by the United Nations is to enhance the supervision and monitoring of global financial institutions as well as tighten such rules.

Due to the fact that economies are dependent on financial institutions to grow the money supply via fractional-reserve banking, the regulatory environment in which financial institutions operate is typically quite stringent. This is because financial institutions are essential components of most countries' economies, and as a result, the economies of these countries recognise the importance of these institutions. The regulatory frameworks that are in place in each nation are distinct from one another, but they often include prudential regulation in addition to consumer protection and market stability. Some nations have one consolidated agency that regulates all financial institutions, while others have separate agencies for different types of institutions such as banks, insurance companies, and brokers. The consolidated agency in some nations is called the Financial Stability Oversight Authority (FSOA).

Norway, Germany, and Russia are examples of countries that have one unified financial regulator amongst the three of them. Norway's financial oversight is handled by the Financial Supervisory Authority of Norway, while Germany's is handled by the Federal Financial Supervisory Authority.