The Philippine Financial System

The 'financial system' is a term used in finance to describe the system that allows money to go between savers and borrowers.

Nature and Importance of Financial Systems

Financial institutions

These are organizations that offer financial services.

Financial Market

The system that allows people to buy and sell goods and services to each other.

Financial Instruments

These are assets belonging to a person or company. This can include cash, bonds, or other assets; such as property or items of value.

Financial services

These are offered by financial institutions. These include such things as banking, insurance policies, loans and mortgages, as well as pensions.

Financial Practice

A sort of guideline around how the financial institutions should operate their services.

Financial transactions

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

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.

Key services provided by Financial System

Barriers to matching

Savers and Borrowers

How to reduce adverse selection?

1. Screening

2. Monitoring

What are Financial Markets?

How does the economy benefit from financial markets?

Philippine Financial Market

Money 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

Capital Market

Primary Market

Secondary Market

Bonds Market

Types of Instruments:

Government Bonds and

Corporate Bonds

Issuers and Investor in the

Local Bond Market

Issuers:

BSP

National Government

Commercial Banks

Main Investors:

Banks

Insurance companies

Corporation and Institutional

Investors

Money vs Capital Markets

Primary vs Secondary Markets

Thank you very much for listening, that concludes

our report about the Philippine Financial System.

The Philippine Financial System

Risk Sharing

Liquidity

Information

Increased production

Increased walfare

Foreign Investors

BSP

Commercial Banks

Brokers

Corporates and

Institutional Investors

Asymmetric information

and information cost

Adverse Selection

What are Financial Systems?

Moral Hazard

Elements of a

Financial System

spend less than they earn

spend more 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

The Philippine financial system consists of:

1. Banks and,

2. Non-bank financial Intermediaries.

What are the roles financial institutions?