LONG QUIZ HANDOUTS 2024 PDF

LONG QUIZ HAND OUTS Overview of the Banking and Financial Institutions Banking - Can be defined as the business activity of accepting and safeguarding money owned by other individuals and entities and then lending out this money in order to earn profit. Key Players in th...

LONG QUIZ HAND OUTS Overview of the Banking and Financial Institutions Banking - Can be defined as the business activity of accepting and safeguarding money owned by other individuals and entities and then lending out this money in order to earn profit. Key Players in the Financial System 1. Savers 2. Borrowers 3. Financial Intermediaries BASIC BUILDING BLOCKS OF FINANCIAL SYSTEM 1. Financial System – A network of various institutions, together with government agencies, laws and policies, which generates, circulates and control money credits. - a complex structure and operation involving every individual and business organization in a civilized society. 2. Financial Institutions – are firms that connect borrowers and lenders, provide savers and borrowers access to financial instruments and markets. 3. Financial Management - involves financial planning, asset management and fund raising decisions to enhance the value of businesses. TYPES OF FINANCIAL INSTITUTION 1. PRIVATE BANKING INSTITUTIONS – a) Commercial Banking Institutions – collects deposits from individual and lend to businesses and individuals. b) Thrift Banks – primarily engaged in mobilizing the small savings of people. They encourage the habit of thrift and savings, and provide loans at reasonable interest rates. c) Universal Banks – a bank that combines the three main services of banking under one roof. c.1. Retail banking – it services the members of the public and small and medium size businesses. c.2. Wholesale banking – involves borrowing and lending money on a very large scale. It include pension funds, giant companies, governments and other financial institutions. c.3 Investment Banking – it focuses on services for major investors and companies. They specialize in the investment requirements of pension funds. 2. GOVERNMENT BANKING INSTITUTIONS 1. Philippine National Bank – a universal bank which operates under the provision of Executive Order No. 80, the 1996 revised charter of PNB 2. Development Bank of the Philippines – provides banking services principally to service the medium and long term needs of agricultural and industrial enterprises, particularly in the countryside and preferably for small and medium enterprises. 3. Landbank of the Philippines – created by the Agrarian Reforms Code to finance the acquisition and distribution of agricultural estates for division and resell these to small landholders. It also financed the purchase of landholdings by Agricultural lessees. 4. Al-Amanah Islamic Investment Bank of the Philippines – created for the purpose of promoting and accelerating the socio-economic growth and development of Mindanao.  3.PRIVATE NON-BANK INSTITUTIONS 2. Securities brokers – are agents of investors who match buyers with sellers of securities. 3. Securities dealers – link buyers and sellers by buying and selling securities at stated price. 4. Building and Loan Association – corporations whose capital stock is required to be paid in by the stockholders in regular, equal periodical payments. 5. Lending Investor – They operate as money brokers. 6. Pawnshops – provide credit to small borrowers who are not qualified to obtain small loans from other financial institutions with the security of personal property. 4.GOVERNMENT NON-BANK FINANCIAL INSTITUTIONS 1. Government Service Insurance System – extends life insurance coverage and benefits to government employees. 2. Social Security System – provide benefits to workers/employees in the private sector. Bank/s – a financial institutions who lends and borrow money. - Bank is an office or institution for keeping, lending, and exchanging of money. - Bank is a business institution that receives surplus funds from individuals, trading or non- trading institution, government or private institution as deposit and supply money with assurance of repayment against security in exchange of profit or interest to trading or non- trading institution, government or private institution who has deficit funds and demand for money and to facilitate this process, create various credit instruments and give facility of withdrawals of deposit as and when needed. BANGKO SENTRAL NG PILIPINAS Objectives: The BSP’s main primary objective is to maintain price stability conducive to balanced and sustainable economic growth. The BSP also aims to promote and preserve monetary stability and the convertibility of the national currency. Responsibilities: The BSP provides policy directions in the areas of money, banking and credit. It supervises operations of banks and exercises regulatory powers over non-bank financial institutions with quasi- banking functions. The BSP Seal The new BSP logo is a perfect round shape in blue that features three gold stars and a stylized Philippine eagle rendered in white strokes. These main elements are framed on the left side with the text inscription “Bangko Sentral ng Pilipinas” underscored by a gold line drawn in half circle. The right side remains open, signifying freedom, openness, and readiness of the BSP, as represented by the Philippine eagle, to soar and fly toward its goal. Putting all these elements together is a solid blue background to signify stability. Principal Elements: 1. The Philippine Eagle, our national bird, is the world’s largest eagle and is a symbol of strength, clear vision and freedom, the qualities we aspire for as a central bank. 2. The three stars represent the three pillars of central banking: price stability, stable banking system, and a safe and reliable payment system. It may also be interpreted as a geographical representation of BSP’s equal concern for the impact of its policies and programs on all Filipinos, whether they are in Luzon, Visayas or Mindanao. Colors 1. The blue background signifies stability. 2. The stars are rendered in gold to symbolize wisdom, wealth, idealism, and high quality. 3. The white color of the eagle and the text for BSP represents purity, neutrality, and mental clarity. Font or Type Face Non-serif, bold for “BANGKO SENTRAL NG PILIPINAS” to suggest solidity, strength, and stability. The use of non-serif fonts characterized by clean lines portrays the no-nonsense professional manner of doing business at the BSP. Shape Round shape to symbolize the continuing and unending quest to become an excellent monetary authority committed to improve the quality of life of Filipinos. This round shape is also evocative of our coins, the basic units of our currency. BSP Security Plant Complex - is responsible for the production of the Philippine currency. Its establishment enables the BSP to have control of the supply, security and quality of the Philippine currency. CONTEMPORARY ISSUES AFFECTING FINANCIAL INSTITUTION 1. The BSP on Money Supply and Deposit Expansion. 1.a) Money Supply – The total supply of money in circulation in a given country’s economy at a given time. 1.b) Deposit Expansion – Change in the money supply as a result of an increase in bank reserves. 2. Monetary Board – The powers and function of Bangko Sentral are exercised by its Monetary Board, which has seven members appointed by the President of the Philippines. 3. Monetary Policy – measures or actions taken by the Central bank to influence the general price level and the level of liquidity in the economy. KEY FACTORS ON CONTEMPORARY ISSUES AFFECTING FINANCIAL INSTITUTIONS 1. Financial Stability – is defined in terms of its ability to facilitate and enhance economic processes, manage risks, and absorb shocks. 2. Regulator – an official or body that monitors the behavior of companies and the level of competition in particular markets. 3. Transparency – the full, accurate, and timely disclosure of information. 4. Deregulation – is the removal or simplification of government rules and regulations that constrain the operation of market forces. Security Features: (1) embossed prints, (2) serial number, (3) security fibers, (4) watermark, (5) see- through mark, (6) concealed value, (7) security thread, (8) optically variable device, (9) optically variable ink (10) tactile Mark Money – can be defined as an object that is readily accepted from anybody as full payment for purchase of a certain commodity or for service rendered by an individual. Barter System – Barter System is the direct exchange for goods to goods, services for services, goods for services and services for goods and it is the earliest system of trading. Characteristics of Money 1. Durability – means that the item must be able to withstand being used repeatedly. 2. Portability – means that individuals are able to carry money with them and transfer it easily to other individuals. 3. Divisibility – means that the money can easily be divided into smaller units of value. 4. Uniformity – means that all versions of the same denomination of currency must have the same purchasing power. 5. Limited Supply- means that restrictions on the amount of money in circulation ensure the values remain relatively constant for the currency. ***and other relevant discussions***