Financial Institutions in Europe

Definition

These are establishments that provide financial services, such as banks, insurance companies, and stock exchanges. In European history, they played a crucial role in the development of capitalism.

Analogy

Think of these institutions like the heart in a body - just as the heart pumps blood to various parts of the body to keep it functioning, financial institutions circulate money throughout an economy to keep it running smoothly.

Related terms

Banking System: This refers to a group or network of institutions that provide financial services. In Europe's case, this system evolved over centuries from simple moneylenders and merchants into complex global networks.

Stock Exchange: A marketplace where securities (like stocks and bonds) are bought and sold. It's like eBay for investments - people buy shares hoping their value will increase over time.

Insurance Companies: These are businesses that protect individuals and companies against potential losses or damages they might suffer because of certain events. Like your friend who always carries an umbrella just in case it rains; insurance companies offer protection for those "just in case" moments.