|“Financial industry is more than entities that provide financial products and services. It is more than an intermediary. It is like Economy‘s spirit, for this reason it is not possible to split them”.
It is not possible to think about societies without financial industry. For that reason, it is necessary to admit that financial industry is a vital economic sector because it globally supports both process economic growth and development. Financial industry expands itself along the economy through its products and services. Those products provide alternatives to every industry and every economic sector because financial industry is compossed of commercial banks, insurance companies, investment institutions like investment banks, stocks exchange, real state firms, and others that are able to play the role of financial suppliers of produccts (financial instruments) and/or financial services in the economy.
Financial industry provides liquidity and hedging conditions to its consumers. Liquidity and hedging conditions are essential for dynamism in an economy. Indeed, every economic activity requieres liquidity for doing business. Also, each economic activity needs to hedge its position of risk that it has to face for doing business activities.
What happend if financial industry stops working? If financial industry does stop working in current economy, it can produces a total caos. If financial industry dissapears, it will create a great social disaster. For example, in the financial crash in the USA (2008), financial markets were going through emergency in the international economic system. This is the reason why the States have rescued financial institutions when they have been in crisis.
It is very simple, people, public institions sector, private firms and NGOs need finacial services and products provided by financial industry. The key word in order to understand that is TRUST. Trust is a social principle that supports the economic activities of financial industry.
Every economic player should trust financial industry if they want to participate economically and socially now a days. A good example of that would be the intrinsic value of paper money is not enough to support its exchange value. It is actually a matter of trust.
Finacial industry can provide more than simple financial products and services to people and judicial persons. Financial industry can offer a special opportunity to everyone, to be part of financial system. It means that financial industry, in general, can offer every one the opportunity to be included in the financial system as investor, saver, borrower and insured. That means also that financial industry can empower people and entities trhoughtout its services and products. That process is labeled as “financial inclusion”.
It is vital for human beings because everyone can reinforce their own skills as academic literature has shown. Global economic researchers coincide in recognizing that financial inclusion can make human life and social structures better if Governments (Policy makers) and Financial Industry work hand-in-hand to include everyone into financial global system. To be included financially should be considered as right and not a privilege.