How to define the finance companies from the business scope?


The classification of the companies in Finance are different from one another according to their main business scopes. The essential function of the financial industry is to improve the efficiency of resource allocation, in other words that the funds will flock into the area where the higher return accompanying with the higher risk, the common sense is that and the financial industry cannot throw away risks, the essence of risk is movable from button to top, and vice versa.


The purpose of financial institutions setup is to control risks and capital fluctuations in order to help the people involved to obtain profits and finally to achieve the goal of resource allocation properly.

The product the financial institutions work on is called fund, the process is to collect and invest fund. According to the level of capital risk return from low to high, the financial institutions rank like this Bank, Insurance, Trust, Brokerage, Fund and Private Investment. Here we will give a brief on the general working what these institution are doing, as follow,

The main businesses of banks are to handle with fund deposit taking and lending, as well as bond, non-standard business of investment banks, and intermediary business of financial products selling. The core advantage of banks in China is the license it holds. Banks with different types of license will enjoy different policies and preferences. Currently, the types of license are divided into national commercial bank, joint-stock banks and local rural commercial banks. Generally speaking, The main business of banks are to draw and lend the funds, the scale of assets and the number of employees in Bank are more higher than other financial institutions.


Insurance fee within the insurance company is one of ways to raise money with the low risk and stable nature. The most important job in insurance is to sell insurance, and insurance is also a license business. Judging from the perspective of investment, insurance hats disgracefully, it is a better suggestion not to touch before you invest, especially the products of insurance investment, such as life insurance, auto insurance and property insurance, etc. Most of workers in the insurance companies are to sell the insurance products, the more selling the higher return. The target customers may be your families, friends and relatives.


Trust companies, besides the banks, also hold the qualification of the license to deal with the fund lending business. Trust companies mainly make loans to real estate companies and local urban investment companies, charging high interest. As a result, Trust companies have become the first choice of high-net worth financial customers. Now, with the suppression of real estate and urban investment, big problems from the trust come out more often. Presently, the trust companies are in a terrible period like a fish in a pool of hot water.


Brokerages provide the agent service, which is to securitize assets. If a company want to be listed, it is necessary to find a brokerage companies to recommend for them. After the recommendation is completed, it will sell its shares for them. The transfer of shares are through the trading system provided by brokerage companies. Brokerage companies are mainly divided into investment banking business, economic business, asset management business and research department.


The final two institutions are fund companies and private investment, two of them are also working on money raising from one group and then invest funds into products like shares, bonds and capital funds,etc.

In a all, the difference institutions take their own responsivities to realize the fund growth and profit expanding. It’s a big task to know each side of financial industry, capital flows like the waterfall, sometimes you think you know it very well while you will probably be lost next, not a pleasant job working in finance but you will also obtain huge sense of achievement, unexpected experience to the life.