What is the difference between a financial entity and a financial institution?

What is the difference between a financial entity and a financial institution Introduction: The Overlapping Terminology Hello and welcome! When discussing the realm of finance, it's easy to get caught up in the jargon. Today, we're going to untangle the concepts of financial entities and financial institutions. While these terms are often used interchangeably, they refer to distinct entities within the financial landscape. Defining Financial Entities A financial entity is a broad term that encompasses any organization or individual engaged in financial activities. This can range from a small-scale sole proprietorship to a multinational corporation. Financial entities can be both for-profit and not-for-profit, and they operate across various sectors, including banking, insurance, investment, and more. Essentially, any entity involved in the management, investment, or movement of funds can be considered a financial entity. The Role of Financial Institutions On the other hand, financial institutions are a specific subset of financial entities. They are entities that provide financial services to individuals, businesses, and even governments. Banks, credit unions, insurance companies, and investment firms are all examples of financial institutions. These entities act as intermediaries, facilitating the flow of funds between different parties.