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Financial institutions


Financial institutions represent one of the most important pillars of the success of the financial system and the financial policies of the country, as the basic activity of the financial system is evident in general. It is the transfer of funds from individuals and institutions that have a surplus of funds to the entities that are exposed to a deficit in financing. The first the party is called depositors or lenders. In this regard, funds can be transferred between the two parties after several methods
1- Direct transfer of funds
2- Semi-direct transfer of funds
3- Transfer through financial intermediaries

First, direct transfer

 The direct transfer of funds is made through the communication between lenders and borrowers without a financial intermediary, so this system is called direct financing. In light of this the system, the debtor party undertakes to return the original amount plus any a specific percentage of interest against the risks that the creditor party may be exposed to.

Secondly, semi-direct conversion

  In this type of transfer of funds, contact is made between those with excess funds and those with a deficit of funds through a third party who maybe
Investment banks
 Brokers
Mortgage banks
Merchants

Third, transfer through financial intermediaries

 Resorting to this type of transfer of funds to financial intermediaries and commercial banks are common examples in this field where they represent a financial intermediary between lenders and borrowers through the client or investor who has a surplus of funds to open a checking account or invest money in a long-term deposit In a way that guarantees him the achievement of the two elements of safety and liquidity to a large degree in addition to achieving an appropriate return through the benefits that he gets from the bank, he promised that the bank would meet the deposits that he would employ in many aspects, most notably granting loans in addition to investing in financial papers or in industrial and commercial projects

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