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CHAPTER 7: The Financial Sector

CHAPTER 7

The Financial Sector

I'd like to live like a poor man with lots of money.

Pablo Picasso

The financial services industry is an important facilitator of economic activity. The primary function of any financial institution is to expedite the exchange of financial resources between savers and borrowers. The financial services sector includes five sub-sectors: banks, insurance companies, consumer financial services, securities companies, and S&Ls. Overall, the financial sector includes more than 5,400 stocks. The sector represents 14.8% of the market capitalization of the S&P 500, making it the third largest sector of the index. As a result of the financial crisis of 2008, the sector lost much of its luster. At one point in 2006, the sector accounted for over 21% of the S&P 500.


  

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