Learn what we mean by financial institutions and financial intermediaries. Learn the two main classifications of financial institutions and understand the significant distinction between depository and non-depository financial institutions. Learn how the financial system works and understand the concept of financial markets.
Depository intermediaries receive deposits from customers and use the money to run their businesses. These institutions may have other sources of income, but the bread and butter of their business are handling deposits, paying interest on them, and lending money based on those deposits.
As the name suggests, non-depository intermediaries don't take deposits. Instead, they perform other financial services and collect fees for them as their primary means of business. Learn more about various types of non-depository financial intermediaries and how they work.