Types of Financial Institutions Quiz

Study Notes

Types of Financial Institutions

Commercial Banks: accepts deposits, makes loans, earns profits, pays interest to depositors, and pays dividends to owners. Examples: CIMB, Maybank, Public Bank.
Savings and Loan Associations (S&L): financial institution accepting deposits and making loans primarily for home mortgages.
Mutual Savings Bank: financial institution whose depositors are owners sharing in its profits.
Credit Union: nonprofit, cooperative financial institution owned and run by its members, usually employees of a particular organization.

Nondeposit Institutions

Pension Fund: nondeposit pool of funds managed to provide retirement income for its members. Examples: Employees Provident Fund (EPF).
Insurance Company: nondeposit institution that invests funds collected as premiums charged for insurance coverage. Examples: MSIG, Prudential, AIA.
Finance Company: nondeposit institution that specializes in making loans to businesses and consumers.
Securities Investment Dealer (Broker): financial institution that buys and sells stocks and bonds both for investors and for its own accounts. Examples: OSK Securities, Maybank Securities, CIMB Securities.

Growth of Financial Services

Individual Retirement Account (IRA): tax-deferred pension fund that wage earners set up to supplement retirement funds.
Trust Services: management by a bank of an estate, investments, or other assets on behalf of an individual.
Private Retirement Scheme (PRS): voluntary long-term savings and investment scheme designed to help in saving more for retirement, with a tax incentive of up to RM3,000 per year.

International Services

Letter of Credit: bank promise, issued for a buyer, to pay a designated firm a certain amount of money if specified conditions are met.
Banker’s Acceptance: bank promise, issued for a buyer, to pay a designated firm a specified amount at a future date.

Electronic Banking

Electronic Funds Transfer (EFT): communication of fund-transfer information over wire, cable, or microwave.
Automated Teller Machine (ATM): electronic machine that allows bank customers to conduct account-related activities 24 hours a day, 7 days a week.

Regulation of the Banking System

Federal Deposit Insurance Corporation (FDIC): federal agency that guarantees the safety of deposits up to $250,000 in the financial institutions that it insures.
PIDM (Perbadanan Insurans Deposit Malaysia): insures deposits in Malaysian banks up to a certain amount.

International Banking and Finance

Electronic technologies permit instantaneous financial transactions around the globe.
International payments process involves the movement of money between buyers and sellers on different continents, subject to exchange rates and currency values.
Currency values and exchange rates reflect global supply and demand, affecting international trade and finance.

Description

Test your knowledge on different types of financial institutions, including commercial banks, savings and loan associations, mutual savings banks, and credit unions. Learn about how each institution operates and serves its customers.