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Financial institutions provide services to households and corporations

. The financial sector's share of aggregate income reveals the value that the rest of the economy attaches to these services.

The financial industry was around 1.5% of GDP in the mid-19th century. The first large increase between1880 to 1900 corresponds to the financing of railroads and early heavy industries. The second big increase between 1918 and 1933 corresponds to the financing of the Electricity revolution, as well as automobile and pharmaceutical companies. GE did its IPO in 1913, GM in 1920 and Procter Gamble in 1932. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became mass-manufactured and distributed.

After a continuous collapse in the 1930s and 40s, the GDP share of finance and insurance industries was down to only 2.5% of GDP in 1947. It recovered slowly and was mostly stable at around 4% until the late 1970s, and then grew quickly to reach 8.3% of GDP in 2006.

The third large increase, from 1980 to 2001, corresponds to the financing of the IT revolution.

The major events that have shaped the modern finance industry are:

The Great Depression (1929): The Great Depression originated in the US with the Wall Street crash in October 1929. The effects of the depression spread across the world, especially in the heavy industries. Capital requirements regulation, financial industry oversights and the insurance of deposit accounts sprang out of this tumultuous period.

Black Monday (1987): On October 19, the stock markets across the world witnessed a huge crash. This was the largest one day decline in the stock market history. The crash started in Hong Kong, spreading to Europe and the US. Analysts blamed computer trading systems for magnifying the losses.

Asian Financial Crisis (1990s): The Asian Financial Crisis was triggered by the collapse of Thai baht as the government of Thailand decided to float the national currency. The nation had a huge foreign debt at that point, driving it to the verge of bankruptcy. The crisis rippled across the whole of Southeast Asia and has led to many emerging market countries to reduce debts and build up foreign currency reserves.

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