Chapter 13 Financial Services PDF

Business Essentials Thirteenth Edition Chapter 13 Financial Services Copyright © 2022, 2019, 2016 Pearson Education, Inc. Learning Outcomes 1 Describe the different kinds of financial institutions explain...

Business Essentials Thirteenth Edition Chapter 13 Financial Services Copyright © 2022, 2019, 2016 Pearson Education, Inc. Learning Outcomes 1 Describe the different kinds of financial institutions explain the services they offer. 2 Identify important ways in which the banking system is changing. 3 Discuss some of the institutions and activities in international banking and finance. Copyright © 2022, 2019, 2016 Pearson Education, Inc. Financial Institutions (1 of 2) Commercial Bank Savings and Loan – company that accepts Association (S&L) deposits that it uses to – financial institution make loans, earn accepting deposits and profits, pay interest to making loans primarily depositors, and pay for home mortgages dividends to owners – Examples: CIMB, Maybank, Public Bank Copyright © 2022, 2019, 2016 Pearson Education, Inc. Financial Institutions (2 of 2) Mutual Savings Bank Credit Union – financial institution – nonprofit, cooperative whose depositors are financial institution owners sharing in its owned and run by its profits members, usually employees of a particular organisation Copyright © 2022, 2019, 2016 Pearson Education, Inc. Nondeposit Institutions (1 of 2) 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 Copyright © 2022, 2019, 2016 Pearson Education, Inc. Nondeposit Institutions (2 of 2) Finance Company – nondeposit institution that specialises 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: RHB Securities, Maybank Securities, CIMB Securities Copyright © 2022, 2019, 2016 Pearson Education, Inc. The 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 Copyright © 2022, 2019, 2016 Pearson Education, Inc. The Growth of Financial Services Private Retirement Scheme (PRS) – voluntary long-term savings and investment scheme designed to help in saving more for retirement. – Tax Incentive - Enjoy personal tax relief of up to RM3,000 per year. Copyright © 2022, 2019, 2016 Pearson Education, Inc. 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 Copyright © 2022, 2019, 2016 Pearson Education, Inc. Electronic Funds Transfer 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 Copyright © 2022, 2019, 2016 Pearson Education, Inc. 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 Copyright © 2022, 2019, 2016 Pearson Education, Inc. Federal Deposit Insurance Corporation Preserves confidence by supervising banks and insuring deposits in banks and thrift institutions Commercial banks pay fees for membership in the FDIC Maintains the right to examine the activities and accounts of all member banks Copyright © 2022, 2019, 2016 Pearson Education, Inc. Are our deposits in Malaysia Bank insured? http://www.pidm.gov.my/downloads/2015/video/DIS-Lat-EN.mp4 Copyright © 2022, 2019, 2016 Pearson Education, Inc. PIDM’s membership All commercial banks licensed under the Financial Services Act (FSA) 2013 All Islamic banks licensed under the Islamic Financial Services Act (IFSA) 2013, including locally incorporated subsidiaries of foreign banks operating in Malaysia http://www.pidm.gov.my/downloads/2015/video/DIS-Lat-EN.mp4 Copyright © 2022, 2019, 2016 Pearson Education, Inc. International Bank Structure World Bank – UN agency that provides a limited scope of financial services, such as funding improvements in underdeveloped countries International Monetary Fund (IMF) – UN agency consisting of about 150 nations that have combined resources to promote stable exchange rates, provide temporary short-term loans, and serve other purposes Copyright © 2022, 2019, 2016 Pearson Education, Inc.