Untitled Quiz

Study Notes

Financial institutions provide various financial services to members and clients.
They function as intermediaries, connecting savers with borrowers.

Banks are key financial intermediaries that lend money and accept deposits to generate revenue.
Heavily regulated to ensure market stability and consumer protection.
Types of banks include:
- Public banks
- Commercial banks
- Central banks
- Cooperative banks
- Government-managed cooperative banks
- Government-managed land development banks

Non-bank financial institutions offer services such as investment, risk pooling, and market brokerage.
They typically lack full banking licenses.
Examples include:
- Finance and loan companies
- Insurance companies
- Mutual funds
- Commodity traders

Financial markets enable trading of securities, commodities, and fungible items based on supply and demand dynamics.
"Market" refers to the aggregate exchanges between buyers and sellers.

Tradable financial assets categorized into:
- Cash Instruments: Their value is directly determined by market conditions (e.g., securities, loans, deposits).
- Derivative Instruments: Contracts deriving value from underlying entities (e.g., assets, indices, interest rates).

Comprises banking institutions and nonbank financial intermediaries, including commercial banks and specialized government banks.

Universal Banks: Largest banks offering a full spectrum of financial services (e.g., commercial banking, investment services).
Commercial Banks: Provide a variety of services such as deposit-taking and loans, primarily for businesses and individuals.
Thrift Banks: Focus on mobilizing savings and lending to individuals and SMEs, known for offerings like savings accounts and mortgages.
Rural Banks: Located in rural areas, these banks address financial needs of farmers and rural communities with services like agricultural loans and microloans.
Cooperative Banks: Managed by cooperatives, serving members with an emphasis on community development.
Digital Banks: Operate entirely online without physical branches, offering digital savings accounts and payment services.
Islamic Banks: Function according to Shariah law, avoiding interest and focusing on profit-sharing and ethical investments.
Development Banks: Finance projects aimed at economic development, particularly in agriculture and infrastructure, offering loans and project financing.