Financial Institution - FI

An establishment that focuses on dealing with financial transactions, such as investments, loans and deposits. Conventionally, financial institutions in composed of organizations such as banks, trust companies, insurance companies and investment dealers. Almost everyone has deal with a financial institution on a regular basis. Everything from depositing money to taking out loans and exchange currencies must be done through financial institutions.

Investopedia Says:
Since all people depend on the services provided by financial institutions, it is imperative that they are regulated highly by the federal government. For example, if a financial institution were to enter into bankruptcy as a result of controversial practices, this will no doubt cause wide-spread panic as people start to question the safety of their finances. Also, this loss of confidence can inflict further negative externalities upon the economy.

Related Links:
The policies of these banks affect the currency market like nothing else - see what makes them tick. Get To Know The Major Central Banks
They print money, they control inflation, and much, much more. All you need to know about central banks is here. What Are Central Banks?

Government agency or privately owned entity that collects funds from the public, and from other institutions, and invests those funds in financial assets, such as loans, securities, bank deposits, and income generating property. Broadly defined, financial institutions act as intermediaries between saver and borrowers and are differentiated by the way they obtain and invest their funds. Depository financial institutions-a group that includes commercial banks, savings and loan associations, mutual savings banks, and credit unions-conduct business by accepting public deposits, which are insured by the federal government against loss, and channeling their depositors' money into lending activities. Nondepository financial institutions, such as brokerage firms, life insurance companies, pension funds, and investment companies, fund their investment activities directly from the financial markets by selling securities to the public or by selling insurance policies, in the case of insurance companies. Increasingly, the boundaries between depository and nondepository institutions have become less distinct. Brokerage firms can invest their customers' money in bank CDs, whereas banks and savings institutions offer securities brokerage and mutual funds.

Company whose "product" involves money, such as making loans or investments and obtaining deposits.
Example: Commercial Banks, Savings and Loan Associations life insurance companies, and Credit Unions are all financial institutions.