1. What is financial services market (fsm)?

Financial services are the economic services provided by the finance industry, which comprises a broad range of organizations that manage money, including credit unions, banks, insurance companies, consumer finance companies, stock brokerages, investment funds.

FSM – the system of markets where professional financial intermediaries provides services on financial assets.

A financial intermediary is a financial institution that connects surplus and deficit agents. The classic example of a financial intermediary is a bank that consolidates deposits and uses the funds to transform them into loans.

Functions of financial intermediaries:

1. risk transformation, decrease the risks,

2. maturity transformation

3. convenience denomination

advantages from using financial intermediaries:

• Cost advantage over direct lending/borrowing, Economies of scale reduces the costs of lending and borrowing

• protection the conflicting needs of lenders and borrowers

Financial intermediaries include:

• Banks

• Building societies

• Credit unions

• Financial advisers or brokers

• Insurance companies

• Collective investment schemes

• Pension funds

2. Segments of the financial services market

FSM – the system of markets where professional financial intermediaries provides services on financial assets.

There are such segments of FSM:

• market of stock brokerage services

• market of insurance services

• market of credit services

Market of stock brokerage services

A stockbroker is a professional individual, who buys and sells stocks and other securities for both retail and institutional clients, through a stock exchange or over the counter, in return for a fee or commission. depending on the license they hold, the type of securities they sell, or the services they provide.

Services of insurance companies

Insurance is the transfer of the risk of a loss, from one entity to another in exchange for payment. An insurer is a company selling the insurance; the policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. 1. Life insurance. 2. Non-Life insurance.

Reinsurance is a process of transferring portions of risk portfolios to other parties with the aim of reduce the likelihood of having to pay a large obligation resulting from an insurance claim.

Services of credit unions

A credit union is a member-owned financial cooperative, providing credit at competitive rates, and providing other financial services to its members

Commercial banking services

The primary operations of banks include:

• Keeping money safe while also allowing withdrawals when needed

• Issuance of chequebooks so that bills can be paid and other kinds of payments can be delivered by post

• Provide personal loans, commercial loans, and mortgage loans

• Issuance of credit cards and processing of credit card transactions and billing

• Issuance of debit cards for use as a substitute for cheques

• Allow financial transactions at branches or by using Automatic Teller Machines (ATMs)

• Provide wire transfers of funds and Electronic fund transfers between banks

An investment bank - a type of financial services entity which, instead of lending money directly to a business, helps businesses raise money from other firms in the form of bonds (debt) or stock (equity).

Capital markets services - underwriting debt and equity, assist company deals (advisory services, underwriting, mergers and acquisitions and advisory fees), and restructure debt into structured finance products.

Private banking - Private banks provide banking services exclusively to high-net-worth individuals. Many financial services firms require a person or family to have a certain minimum net worth to qualify for private banking services.^[2] Private banks often provide more personal services, such as wealth management and tax planning, than normal retail banks.^[3]

Brokerage services - facilitating the buying and selling of financial securities between a buyer and a seller.

Foreign exchange services are provided by many banks and specialist foreign exchange brokers around the world. Foreign exchange services include:

• Currency exchange - where clients can purchase and sell foreign currency banknotes.

• Wire transfer - where clients can send funds to international banks abroad.

• Remittance - where client that are migrant workers send money back to their home country.