Financial Sector

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What is the 'Financial Sector'

A category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate.

BREAKING DOWN 'Financial Sector'

Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investments. Improved economic conditions usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a larger number of loans.

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RELATED FAQS
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  3. What is a typical price-to-book ratio in the financial services sector?

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  4. What are the main reasons an investor should consider an allocation to the banking ...

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