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What are Financial Systems?
The 'financial system' is a term used in finance to describe the system that allows money to go between savers and borrowers.
Elements of a
Key services provided by Financial System
What are Financial Markets?
How does the economy benefit from financial markets?
Money vs Capital Markets
Nature and Importance of Financial Systems
spend more than they earn
spend less than they earn
Allocate or match the supply of savings in the economy
to the users of those savings in a safe and efficient manner
These are organizations that offer financial services.
The system that allows people to buy and sell goods and services to each other.
These are assets belonging to a person or company. This can include cash, bonds, or other assets; such as property or items of value.
These are offered by financial institutions. These include such things as banking, insurance policies, loans and mortgages, as well as pensions.
A sort of guideline around how the financial institutions should operate their services.
These are the actual exchange of assets for goods or services - paying for a new car, or a loan, for instance.
These six elements work together to create a healthy financial system, which in turn builds a strong economy. No one element is more important than the others - they simply represent different mechanisms within the system that allow it to function.
Components of Philippine Financial System
The Philippine financial system consists of:
What are the roles financial institutions?
1. Term transformation
2. Economies of scale and diversification
in the use of funds
3. Technical Expertise
The major types of financial institutions in the Philippines are the commercial banks, rural banks, thrift banks, specialized government financial institutions, offshore banks, insurance companies and non-bank financial institutions.
The first four types of financial institutions take deposits from public. Because of this, the Bangko Sentral ng Pilipinas supervises them. The last three types are intermediaries with non-deposit sources of funds.
Barriers to matching
Savers and Borrowers
and information cost
How to reduce adverse selection?
Philippine Financial Market
Money market instruments:
1. Negotiable Certificates of Deposit.
2. Short-Term and Long-Term Commercial Papers.
3. Banker's Acceptances.
4. Treasury Bills, Notes and Bonds.
5. Repos and Reverse Repo
Participants in the
Philippine Money Market
Primary vs Secondary Markets
Thank you very much for listening, that concludes
our report about the Philippine Financial System.
Types of Instruments:
Government Bonds and
Issuers and Investor in the
Local Bond Market
Corporation and Institutional