Financial Institutions: Understanding, Benefits, Functions, And Types With Complete Examples - Do you know what is meant by financial institutions ?? A financial institution is an institution or business entity engaged in the financial sector to channel funds or to provide services to customers and has a function as a fund collector of customers. For more details here will be a full review of financial institutions. For that, let's look at the reviews below.
Definition of Financial Institutions
A financial institution is a business entity that collects an asset in the form of funds from the public and is channeled to finance a development project and for economic activities by getting results in the form of interest at a certain percentage of the amount of funds channeled.
Understanding Financial Institutions According to Experts
1. Article 1 of Law No. 14/1967 and replaced with Law No. 7/1992
According to Article 1 of Law No. 14/1967 and replaced with Law No. 7/1992 states that a financial institution is a body or institution whose activities are to withdraw funds from the community which then distribute it to the community again.
2. RI Minister of Finance Decree no. 792 Th 1990
According to the decree of the Minister of Finance RI no. 792 Th 1990 revealed that financial institutions are all business entities that are in a financial sector that conducts a collection of funds, channeling funds to the people who are most important in providing development investment costs.
3. Cashmere (2005: 9)
According to Cashmere revealed that financial institutions are for all companies that are in the financial sector where an activity is, or just raising funds or just to channel funds or maybe both.
4. Dahlan Siamat
According to Dahlan Siamat revealed that a financial institution is a business entity whose wealth is primarily in the form of a financial asset compared to a nonfinancial asset or Real asset.
5. Ahmad Rodoni
According to Ahmad Rodoni revealed that a financial institution is a business entity whose wealth is mainly in a form of financial assets and non-financial assets.
Function of Financial Institutions
Functioning to facilitate the exchange of products (goods and services) using money and credit instruments.
Serves to collect funds from the public in the form of savings and distribute it to the community in the form of loans. Or in other words, Financial Institutions raise funds from parties who are excess funds and distribute it to those who are underfunded.
Serves to provide knowledge and information, namely:
The Financial Institution carries out a task as an expert in the economic and credit analysis for one's own interests and other interests (customers).
Financial Institutions are obliged to disseminate information and activities that are useful and beneficial for their customers.
Giving guarantees.
Financial institutions can provide a legal and moral guarantee regarding the security of public funds entrusted to these financial institutions.
Creating and providing liquidity
Financial institutions can provide confidence to the client that the funds deposited will be returned when needed or when due.