Financial institutions are companies that perform important financial and monetary functions such as lending, depositing, investing, and wealth management. The primary financial institutions are banks, trust companies, insurance companies, brokerage firms, and investment dealers. A strong and stable system of financial institutions, particularly regarding banks, is crucial because their activity can influence economic growth. The financial crisis in 2008 proved that a weak banking system can provoke a global economic crisis.
The role of central banks is especially important in terms of economic stability. During the economic crisis caused by the coronavirus pandemic in 2020, central banks all over the world provided quantitative easing measures to help stimulate the economy. In 2022, the spotlight shifted to key interest rates, which were raised frequently as a response to the alarmingly increasing inflation.
The market capitalization of the largest global banks took a hit in 2020 because of the global economic crisis caused by the coronavirus pandemic. Some of the world’s largest banks saw market cap values drop by more than a third, and some almost by half. In 2021, the market capitalization of the global banking market increased again and has remained steady throughout 2022 even exceeding the pre-pandemic values.
The European Central Bank (ECB) is a crucial financial institution in Europe’s economy. The ECB is responsible for administering monetary policy in the eurozone, which with its 20 member states constitutes one of the largest currency areas in the world, making it one of the world’s most important central banks. The net income of the ECB peaked in 2019 and decreased sharply in the following years.
With the rising trend of online banking, established retail banks are being challenged by online banks. Online banks exist purely in digital form, and customers may prefer them to traditional banks because of their easy access through the app, their personalization features, and their low fees. The Middle East and Africa had the lowest number of challenger banks worldwide as of 2022, with Europe having the highest number of challenger banks.
The world’s largest bank by market capitalization is JPMorgan Chase. The publicly listed commercial bank had total assets of approximately 393 billion U.S. dollars in 2022. The two following largest banks in the world are Bank of America and Industrial & Commercial Bank of China. These two banks taking second and third spots hold assets exceeding two billion U.S dollars.
Asset management companies are another key component of financial institutions. These companies manage funds for individuals and companies. The world’s leading asset managers are U.S.-based firms: Eight of the ten largest asset management companies in the world are based in the United States. The largest asset management companies are BlackRock and Vanguard Group.
The category Financial Institutions presents statistics and reports on establishments that provide financial services. These establishments include central banks, retail and commercial banks, online banks, investment institutions, and asset management companies, among others.