A finance company is an organization or a type of financial institution which offers financial services to the customers. Finance companies are governed by the rules and regulations drafted by government authorities.
Financial companies usually include building societies, banks, credit unions, asset management firms, stock brokerage firms, non-banking financial institutions, insurance companies, and other types of businesses.
Finance companies often function as mediators in the stock market and debt security market. The responsibility of finance companies is to collect funds from the investors and transfer them to financial institutions who are looking for such funds.
Finance companies deal with stock, bonds, savings, lending, budgeting, borrowing, investing, risk diversification, insurance, hedging, portfolio management, and other activities.
Finance companies play a significant role in the economy of a country because they let the money flow through different channels of economy. They facilitate the generation of revenue and revenue growth by mitigation of risks.
Since the future is uncertain, finance companies try to find out answers regarding the future value of investments by application of certain models. They advise investors regarding the profitability of investments and guide them with the help of their expertise. They also try to educate investors by imparting educational programs regarding valuation of assets, currencies, stocks, bonds, and commodities.
Last Updated on : 1st August 2013