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Brigham and Ehrhardt (2017) describes the function of financial institutions as providing a wide variety of services and products, both domestically and globally. There are several different types including,

Investment banks, which help companies raise capital, provide advisory services and offer M&A consulting. Most institutions under this category provide brokerage services as well for both individuals as well as other institutions. In addition to providing advisory and brokerage services, these institutions usually act as a facilitator to assist with trades for institutional customers such as pension funds.

Depository institutions, such as credit unions, mutual savings banks and commercial banks which, in short, take deposits from savers and then lend most of the deposited money to borrowers. (Brigham & Ehrhardt, 20187). Some of these institutions include

Savings and Loan Associations (S&LS) which accept deposits from multiple savers and loan the money to home buyers and consumers.

Credit Unions which are made up of members who share a command bond, such as living in the same area or working for the same company.

Commercial Banks which are common to most of us, and is an institution where people will deposit money into a checking account and can then withdraw money using checks or debit cards.

Contractual institutions, such as life insurance companies and pension funds, which invest funds in stocks and then make payments to beneficiaries.

Each of these financial institutions serves a unique purpose dictated by the specific clientele they are catering to. While a commercial bank might be the most commonly known financial institution for the average person, its important to understand how each one works individually in order to properly plan for the future, both as an individual and as a business.