...1-1 A Modern Financial System—An Overview 1-2 Learning Objectives • Explain the functions of a financial system • The main types of financial institutions • Describe the main classes of financial instruments issued in a financial system • The flow of funds between savers / borrowers • Distinguish between various types of financial markets according to function • Appreciate the importance of globalisation • Understand the effects and consequences of a financial crisis on a financial system and economy 1-3 1 Functions of a Financial System • Money – Acts as medium of exchange – Solves the divisibility problem, i.e. where medium of exchange does not represent equal value for the p q parties to the transaction – Facilitates saving – Represents a store of wealth 1-4 Functions of a Financial System (cont.) • Role of markets – Facilitate exchange of goods and services by bringing opposite parties together establishing rates of exchange, i.e. prices • Financial Markets consist of: • Surplus units – Savers of funds available for lending • Deficit units – Borrowers of funds for capital investment and consumption 1-5 1.1 Functions of a Financial System (cont.) 1-6 2 Functions of a Financial System (cont.) • Financial instrument – Issued by a party raising funds, acknowledging a financial commitment and entitling the holder to specified future cash flows • Double coincidence of wants satisfied – A transaction between two parties that meets their...
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...Part 1 The Global Financial System in Perspective Try to imagine living in a world in which there are no financial institutions, no financial markets, and no financial assets. In such a world, there would be no opportunity to borrow against future income in order to purchase a home or an automobile, or to finance an education. Nor would you be able to save some of your current income (and, thereby, accumulate wealth over time) to handle the future expenses of a growing family or retirement. Businesses could not come up with the resources needed to produce the goods and services you like to consume. There would be no way to acquire insurance against sickness and death. Even the simple act of buying food would become extremely difficult, requiring you to barter simply to survive. The financial system has emerged to fill these and many other critical needs that require some separation in time between the use of resources (such as capital and labor), the production of goods and services, and the actual consumption of those goods and services desired. Financial markets and institutions deal with these issues and provide for the smooth functioning of modern economies, enabling resources to find their way to their most highly valued use. In so doing, the financial system dramatically enhances the efficiency of the economy and raises our standard of living. In order to set the stage for our study of the global financial system, Part One of Money and Capital Markets takes up essential...
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...business and accountancy CBEB 2102 financial management Group Member: Isabelle Chong Sim Yi – CEB 110017 Li Ying – CEB 110716 Yap Hong Zhen – CEB 110084 ------------------------------------------------- University malaya faculty of business and accountancy CBEB 2102 financial management Group Member: Isabelle Chong Sim Yi – CEB 110017 Li Ying – CEB 110716 Yap Hong Zhen – CEB 110084 GROUP REPORT 1 GROUP REPORT 1 Table of Contents Question No. | Details | Pages | 1 | Describe the roles and functions of financial markets in Malaysia. | 1 | 2 | Identify four (4) relevant regulators in Malaysia. | 1 | 3 | Choose two (2) regulators identified in (2) above and justify your selection i.e. explain the reasons for your choice. | 2 | 4 | Explain the roles and activities of the two regulators that you have chosen. | 2 | 5 | Give examples of actual enforcement actions that have been taken by the regulators chosen in (3) above. | 3 | 6 | References | 4 | 1) Describe the roles and functions of financial markets in Malaysia. Financial markets are forums in which suppliers of funds and demanders of funds can transact business directly. There are two operations of financial markets, which are primary market and secondary market. Primary market is financial market in which securities are initially issued; the only market in which the issuer is directly involved in the transaction. The function of the primary markets is to facilitate the efficient allocation...
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...MANAGEMENT PGDM-1 2012-2013 INDIAN FINANCIAL SYSTEM TOPIC- FINANCIAL MARKET SUBMITTED TO: SUBMITTED BY: Miss Ankita Rajdev Nisha Kumari Garima Jain Kohila Chouhan Laxmi Nandwani Sanchita Vishwakarma Neha Satwani ACKNOWLEDGEMENT Guidance, help and encouragement are the essential requirement for successful completion of assignment. We own our gratitude to all those who have helped us in the preparation of this assignment. We express our deepest gratitude to our assignment guide Ms. ANKITA RAJDEV, Asst. professor for her valuable guidance and help in completion of this assignment. We feel obliged to all the respondents, friend and other who have shared their valuable time and opinion, for making significant contribution directly or indirectly in the assignment. INDEX S.no. | Topic | Page no. | 1 | INTRODUCTION TO FINANCIAL MARKET | 4-5 | 2 | MONEY MARKET | 5-6 | 3 | CAPITAL MARKET | 6-8 | 4 | PRIMARY CAPITAL MARKET | 8 | 5 | SECONDARY CAPITAL MARKET | 8-9 | Financial Markets Introduction Financial markets are a mechanism enabling participants to deal in financial claims. The markets also provide a facility in which their demands and requirements interact to set a price for such claims. The participants in the financial markets are the borrowers (issuers of...
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...Finance 1 Elnar, Jayson R. Prof: Mrs. Cardema CA6-C1 What is Financial Claims? Financial claims and obligations arise out of contractual relationships between pairs of institutional units. A financial claim: (a) entitles a creditor to receive a payment, or payments, from a debtor in circumstances specified in a contract between them; or (b) specifies between the two parties certain rights or obligations, the nature of which requires them to be treated as financial What Can I Claim For? There are three types of claims that we may be able to help you with, which are: • Mis-sold PPI (payment protection insurance on loans & credit cards) • Unfair Charges (credit card and bank charges) • Unfair Contracts (this includes unenforceable credit agreements for credit cards, loans and in some cases, mortgages) Mis-sold PPI Claims If you have a credit card, store card, loan or car finance there’s a fair chance you'll have payment protection insurance. Many of these policies were mis-sold, which means that you may be entitled to claim compensation. Remember If you’ve ever borrowed money, you could have a PPI. PPI is an insurance to cover your payments should you fall into financial hardship by becoming unemployed, ill or have suffered an accident. PPI cover can be purchased at the same time as the loan, mortgage or credit card is applied for, taken out later, or offered as a stand...
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...• Importance of Stock Markets and Connection to the Countries’ Economies “Financial markets perform the essential economic function of channeling funds from households, firms, and governments that have saved d surplus funds” (Mishkin, 2009, p.25).The primary economic functions of financial markets are; price discovery, liquidity, and reduced transactional costs (Drake & Fabozzi, 2010). Stock markets are vital for business as they directly impact on decision making in that price discovery of shares directly influences “the amounts of funds that can be raised by selling newly issued stock to finance investment spending” (Mishkin, 2009, p.5). Furthermore, the liquidity enables investors’ trade. There is a ready market for assets that can be done through primary and/or secondary equity markets. They reduce transaction costs in the sense that explicit and implicit costs in connecting different counterparties are eliminated (Drake & Fabozzi, 2010). It effectively acts as a meeting point for buyers and sellers of different asset classes to connect. The regulatory element means that all the transactions executed in stock markets are secure and meet certain defined standards that obligate the counterparts to accede to. Ludvigson & Steindel (1999) undertook empirical studies that revealed the correlation between stock market importance and its effect on consumption. They noted that cyclical movements of the stock markets had direct impact on consumption trends. Essentially, during...
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...STRATEGY & Honing Your HUMAN RESOURCES ORGANIZATION & CULTURE FINANCE & ACCOUNTING HUMAN RESOURCES COMPETITIONCompetitive Edge Finance Function in a Global Corporation The H 108 Harvard Business Review | by Mihir A. Desai HISTORICALLY, the finance functions in large U.S. and European firms have focused on cost control, operating budgets, and internal auditing. But as corporations go global, a world of finance opens up within them, presenting new opportunities and challenges for CFOs. Rather than simply make aggregate capital-structure and dividend decisions, for example, they also have to wrestle with the capital structure and profit repatriation policies of their companies’ subsidiaries. Capital budgeting decisions and valuation must reflect not only divisional differences but also the complications introduced by currency, tax, and country risks. Incentive systems need to measure and reward managers operating in various economic and financial settings. The existence of what amounts to internal markets for capital gives global corporations a powerful mechanism for arbitrage across national financial markets. But in managing their July–August 2008 | hbr.org John Hersey Honing Your Competitive Edge FINANCE & ACCOUNTING internal markets to create a competitive advantage, finance executives must delicately balance the financial opportunities they offer with the strategic opportunities and challenges presented by operating in multiple...
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...facing the start of a new business and the funding of one. I will talk about the 4 terms investment banker, the stock market, financial management, risk financing, and how each one of them works. I will also discuss 1 of 3 ways that you can use when funding your business. Finally I will identify, describe, and explain everything else that deals with making a funding decision. FUNDING A BUSINESS VENTURE Unit 2-IP 3 Investment Banker Investment bankers are: They are critical figures in financial markets. They are involved in virtually all large financial transactions including mergers and acquisitions, initial public offering, and other securities offerings. An investment banker is someone who also helps companies raise capital by trading in securities and other investments. They function as: Investigation, Analysis and Research (Origination), Underwriting (Public cash offering) and Distribution. Most of the time a single investor banker performs all functions, however some investment bankers are specialized in certain functional areas only. The importance of an investment banker is actually the importance of what they do. They hold importance because of the services they provide to the economy and government. They provide advisory services for financial transactions such as mergers and acquisitions for companies. Simply without them...
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...system Prepared by: Class of: Banking and finance Epoka University Table of contents Chapter 1 4 Financial system, meaning and its constituent’s elements 4 Chapter 2 5 Financial bank institutions. Meaning and their functions 5 Chapter 3 6 Banking System 6 Non bank financial institutions. Meaning and their functions 6 Chapter 4 9 The role of government in the credit market 9 The role of other financial credit institutions credit in financing the economy in Albania 9 The role of banks in lending activity in the country 10 Conclusions 11 Abreviations 11 Entry Progression and technological innovations are continuously effecting in a sensible way in every field of life, but especially and faster those has been felt in the Bank System. In now days, we are not only in front of a fast liberalization, globalization, but also in expanding financial market, updated always with new bank’s products. Albania is integrating everyday its self with this progress, despite national and international challenges that it faces time by time. Credit process has a main and important role in the economic progress, of financial system in our country. It is named like the locomotive that draws the most of economy growth. Since our agents are operating in a very flexible background, business world is more and more combined and conditioned by banks and financial institutions. Bank institutions are raising economy efficiency, through channeling of funds, by so contributing...
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...Financial markets and institution are life blood of any economy. DISCUSS. What are financial markets market An actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter. Markets include mechanisms or means for (1) determining price of the traded item, (2) communicating the price information, (3) facilitating deals and transactions, and (4) effecting distribution. The market for a particular item is made up of existing and potential customers who need it and have the ability and willingness to pay for it. Buyers and sellers of stocks or bonds or futures and options contracts use the financial markets to meet to buy and sell the products through a middleman exchange. What are the financial markets? That's a good question, because financial markets go by many terms, including capital markets, Wall Street, even simply "the markets". Whatever you call them, financial markets are where traders buy and sell stocks, bonds, derivatives, foreign exchange and commodities. These markets are where businesses go to raise cash to grow, companies reduce risks, and investors make money. Types of Financial Markets The Stock Market is a series of exchanges where successful corporations go to raise large amounts of cash to expand. Stocks are shares of ownership of a public corporation that are sold to investors through broker...
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...the Russian financial markets ." Financial relations are a crucial element binding system of economic relations into a coherent whole , especially in the formation and development of market relations. The financial market is to establish direct contacts between buyers and sellers of financial of resource. He is one of the most important elements of any economy , because it allows to mobilize available cash flow and efficiently distribute them among those who need them , thus contributing to the activity of economic agents and the economy as a whole. Therefore, this topic is relevant since the inception of commodity-money relations and the emergence of the state with its functions and objectives. The Russian economic science problems of financial market models and methods of its regulation serious attention . Object of research - Russian financial market . Subject of research - development of the financial market in the Russian Federation. The purpose of this coursework is to familiarize with the history of the Russian financial market , revealing its contemporary problems and prospects of development .. To do this, perform the following tasks : • master the basic aspects regarding the financial markets; • familiar with the basic concepts ; • examine the current situation on the world market; An analysis of the financial activities of the state , condition, problems and development of financial markets in Russia ; ...
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...money. At the micro level, finance is the study of financial planning, asset management and fund raising for business and financial institutions. At the macro level, finance is the study of financial institution and financial markets and how they operate within the financial systems in both the domestic and global economics. Scholar’s view: “Finance consists of providing and utilizing the money, capital rights, credit and funds of any kind which are employed in the operation of an enterprise.” _George R Terry “Finance is concerned with the process, institutionsmarkets and instruments involved in the transfer of money among and between individuals, business and governments”. _Lawrence J Gitman From the above discussion, it can be said that finance is the process of financial planning, identification of sources of fund raising, investment of fund, protection of fund, distribution of profit to achieve the goal of the organization. Question-2: What is business finance? Ans: Generally, finance which is concerned to meet all the financial needs of business enterprise is called business finance. Alternatively; business finance is the field of study with the help of which one can understand formulation of financial planning, organizing and controlling...
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...RBI & Its Monetary Policies Table of Contents NO. | Particulars | 1. | Introduction of RBI | 2. | Monetary policy | 3. | Monetary policy objectives | 4. | Monetary policy functions | 5. | Operations of Monetary policy * Quantitative credit control * Selective or qualitative methods | 6. | Operating procedures of Monetary policy * Liquidity adjustment facility (LAF) * Market stabilization scheme | 7. | Monetary policy tools | 8. | Recent changes in Monetary policy | 9. | Evaluation of Monetary policy | 10. | Limitations | 11. | Conclusion | 12. | Bibliography | 13. | | 14. | | 15. | | 16. | | INTRODUCTION OF RBI The central bank of the country is the Reserve Bank of India (RBI). It was established in April 1935 with a share capital of Rs. 5 crores on the basis of the recommendations of the Hilton Young Commission Reserve Bank of India was nationalized in the year 1949. The general superintendence and direction of the Bank is entrusted to Central Board of Directors of 20 members, the Governor and four Deputy Governors, one Government official from the Ministry of Finance, ten nominated Directors by the Government to give representation to important elements in the economic life of the country, and four nominated Directors by the Central Government to represent the four local Boards with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Boards consist of five members each Central Government...
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... The deep and prolonged recession in the United States and Europe from the 2008 financial crisis adversely affected GDP growth in FY2009 (see discussion under Macroeconomics Environment).1 from 1991 to 2005, the national poverty incidence fell from 59% to 40%. Efforts to overcome poverty face numerous constraints, including the urgent need for strong law and order, good infrastructure, sound and efficient financial markets, highquality social services that are accessible and affordable, and an enabling environment for private sector development. The government’s National Poverty Reduction Strategy reaffirms that poverty reduction and accelerating the pace of social development are Bangladesh’s most important longterm strategic goals. The development of the financial sector is critical for meeting the twin goals of economic growth and poverty reduction since the financial sector mobilizes resources and allocates them to those investments that are capable of generating the highest return on capital. The better the financial sector can fulfill this role, the better the economy will perform in the long run. Financial sector development can benefit the poor by: (i) promoting overall economic growth, which in turn leads to improved income levels overall, and (ii) reducing the risk of financial crises, whose adjustment costs are most felt by the poor improving access of the poor to financial services. 3.1.0 Introduction: In economics, typically, the term market means the aggregate of possible buyers and sellers of a...
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...India Act, Insurance Act etc dates back to the 1930s. Though there has been moderations of the laws over the years, Indian Financial Sector and its underlying foundation is in need of holistic restructuring. Keeping this in mind, in March 2011, the Government of India, Ministry of Finance established the Financial Sector Legislative Reform Commission or FSLRC to mend the legal and institutional structure of the Indian Financial Market. The Commission was chaired by B. N. Srikrishna, former judge of the Supreme Court and the other board members consisted of virtuoso of various fields like Finance, Economics, Laws and Public Administration. The Commission took up a intense two year process starting from April, 2011 and submitted its “text of the findings and recommendations” in March,2013. For better and effective functionality in finance sector and avoid conflicts of interest among different regulatory, the Financial Sector Legislative Reforms Commission (FSLRC) recommended to have well structured Government agencies. The Commission has pitched for specialized and consolidated set of provisions on regulatory governance by bringing a bill, called Indian Financial Code Bill. Government agencies are required to perform complicated functions in eight major areas of finance sector: consumer protection, micro-prudential regulation, resolution of failing financial firms, capital controls, systemic risk, development, monetary policy and debt management. And if we have quick review of India’s...
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