Financial and Professional Services Sector

The broader financial services sector in any country is comprised of three overlapping components: the financial enterprises (such as banks) and regulatory authorities; the financial markets (such as the bond, equity, and currency markets) and their participants (issuers and investors); and the payment system (including cash, checks, and electronic means for payments) and its participants. The provision of personal and consumer credit can fall under the category of financial intermediaries. Other types of financial intermediaries include securitizers, investment firms, leasing companies, hire purchase, and hire purchase agreements. When looking at the financial services industry from a more holistic perspective, it is sometimes necessary to include not only the financial industry but also the business services that are necessary for it to function properly.

Responsibilities 

The regulatory authorities are responsible for ensuring that the financial enterprises are operating in accordance with the law (e.g. banks). Through the interaction of these parts, it is possible for savings made in other areas of the national or, increasingly, international economy to be converted into funds that can be used for either investment or consumption. Intermediation and the provision of financial services are the primary activities that financial institutions pursue. Some examples of these activities include accepting deposits, borrowing money, lending money, providing various types of insurance coverage, leasing financial assets, and investing in financial assets. 

The majority of nations’ largest deposit-takers and providers of financial services are banks; however, the market shares and power of other organisations such as insurance companies and post office savings institutions are growing. The previous decade also witnessed the meteoric rise of a financial infrastructure, entities, and practises that are collectively referred to as a shadow banking system. This system includes businesses such as hedge funds, private equity funds, money market funds, and special investment vehicles, amongst others. Many commentators are of the opinion that the shadow banking system, which functions independently from any national supervisory framework despite being intricately entwined with the regulated financial system, may have been a significant contributor to the beginning of the global financial and economic crisis that broke out in the latter half of 2008.

The individuals, partnerships, firms, or corporations that provide services such as accountancy, public relations, translation and interpretation, system analysis and design, real estate agencies, and other similar services are included in the professional services sub-sector.

International Labour Organisation (ILO)

Recent work conducted by the International Labour Organisation (ILO) in the areas of financial services and professional services has concentrated on the employment effects of mergers and acquisitions in banking and financial services, as well as the impact of the financial crisis on workers in the finance sector.

Conclusion

Balanced growth is necessary for economic development, and this can be accomplished by simultaneously fostering expansion across all relevant sectors. The savings that people have are directed into investment channels with the help of the financial system. It helps in both the mobilisation of savings and the making of better use of these funds by allowing investments in a variety of different economic sectors. Tax increases during a period of economic contraction only serve to make people’s lives more difficult and compel them to spend even less money. As a result, one of the primary objectives of financial systems is to maintain economic stability. The primary responsibility of central banks is to either maintain economic steadiness or to restore economic balance in the event that economic conditions deteriorate.