why are financial institutions important 
financial institutions are essential because they provide a marketplace for money and assets so that capital can be efficiently allocated to where it is most useful for example a bank takes in customer deposits and lends the money to borrowers without the bank as an intermediary any individual is unlikely to find a qualified borrower or know how to service the loan via the bank the depositor can earn interest as a result likewise investment banks find investors to market a company s shares or bonds to 