Question

Explain how financial institutions serve the needs of consumers, small businesses, and corporations. In the event the needs are provided how can it impact the consumer services?

Answer 1

Financial institutions help in providing finance which is a lifeline for small business, corporation and individual. Financial institutions are always ready for providing credit on the basis of your credit worthiness and it is responsible for maintaining the Liquidity of money in the overall economy.

Financial institutions acts as an intermediary between the lenders and borrowers .It helps with accepting deposits from the a large number of corporations and individuals who have excess Money and provide a rate of interest on those deposits . Financial institutions then channelize those deposits to those who are in requirements of credit and charge a rate of interest from them and maintaining a Liquidity in the whole economy.

It can impact the the consumer services to a very large extent as it is the backbone for the entire economy and any adverse situation could cripple the entire economy as consumer demand will shrink and so as supply. So, It is not just an intermediary , it is the most important sector that keeps the entire economy together.