Principles of Business – P4DB Basically, a financial institution (as it is referred to in financial economics) serves in the capacity of an agent providing various financial services for its members and clients. All currently existing financial institutions usually fall under financial regulation from a government authority in their daily operation. So, despite there are numerous types of financial institutions, the most common types of financial institutions include credit unions, banks, building societies, asset management firms, stock brokerages, as well as some other similar businesses. The primary financial institutions can be classified by the following types: focused, public, and semi-public. According to the scenario A, it is required to select the most appropriate financial institution for a young, married, professional couple with high debt, and high combined income. The couple is looking for long-term insurance and investment financial accounts. Taking into consideration all details, the most appropriate financial institution will be a focused financial institution.
A focused institution returns value to its stakeholders (staff, members and community) each and every day. A focused financial institution is an institution that seeks clients with a particular need, and may be a financial credit company that offers credit, loans, and other financial needs, pension fund offering a medium for investments, and long-term interest accumulation, insurance companies that will offer the couple an insurance products they will need, securities brokers, etc (Types of Financial Institutions).
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In such a way, a focused financial institution is the most appropriate institution for the married professional couple. According to the scenario B, it is required to select the most appropriate financial institution for a university student, who needs her first financial savings and checking accounts. It is also known that the student has little to no existing credit and is looking at establishing credit references and a long-term financial relationship. The student lives on campus and prefers to join a local financial institution.
Taking into consideration all details provided in the scenario, it is possible to make an assumption that the student can, probably, choose a campus credit union that offers a basic checking and savings account inexpensive to open, and some sort of a “Nest Egg” savings account, for example, that functions like some sort of a holiday club to help him with longer-term savings. Campus credit union will be also convenient, as usually on-campus credit unions also focus on teaching the students how to manage their finances more effectively, and stay out of debt (Campus Credit Unions Help Students Start Out Right, 2007).
As far as campus credit unions are member-owned and non-for-profit financial institutions, they usually charge students lower and fewer fees, and have lower minimum balance requirements, and, finally, offer significantly better rates than banks. In such a way, by choosing the campus credit union, the student will be able to establish credit references and a long-term financial relationship. According to the scenario C, it is required to select the most appropriate financial institution for a small business owner, who is planning an expansion strategy. It is also said that the owner will need banking availability within several regional cities and will also need to have a variety of business accounts including checking, money market, savings, and possibly even investing accounts. Access to financial resources is of the utmost importance for her business.
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Taking into consideration all details provided in the scenario, it is possible to make an assumption that the business owner should choose a bank, as banks offer a wide range of products and services, such as savings, checking, loans and lines of credit, insurance business, and business rewards (Wells Fargo), international business services, and access to financial resources. References Campus Credit Unions Help Students Start Out Right. (n.d.).
Retrieved January 9, 2008, from http://www.wpcu.coop/default.aspx?ContentItem=1971 &L3=0 Types of Financial Institutions. (n.d.).
Retrieved January 9, 2008, from http://atech.org/faculty/harmon/bf/TellerTraining/ Mod1-1-23.htm Wells Fargo . (n.d.).
Retrieved January 9, 2008, from https://www.wellsfargo.com/biz/.