Institutions can be classified into formal institutions, which are established through laws or regulations, and informal institutions, which develop through customs and traditions. Formal institutions include governmental bodies, regulatory agencies, and legal systems, while informal institutions include social norms, cultural practices, and unwritten rules that shape behavior. Additionally, institutions can also be classified based on their functions, such as economic institutions (e.g. banks, stock exchanges) and social institutions (e.g. schools, hospitals).