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Finance Industry

Definition

The finance industry encompasses businesses and institutions that manage money, including banks, credit card companies, insurance companies, accountancy firms, investment funds and stock brokerages.

Analogy

Think of the finance industry as the blood circulation system in your body. Just like how your heart pumps blood to different parts of your body to keep it functioning properly, the finance industry circulates money throughout the economy to keep it running smoothly.

Related terms

Banking: This refers to the business activity of accepting and safeguarding money owned by other individuals and entities, then lending out this money in order to conduct economic activities such as making a profit or simply covering operating expenses.

Investment: This is the act of allocating resources (usually money) with the expectation of generating an income or profit. It's like planting seeds today so you can reap fruits tomorrow.

Insurance: Insurance is a contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. It's like carrying an umbrella all the time just in case it rains.