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Banking: Development and Growth
Transcript of Banking: Development and Growth
-Record show that there were banking activities in Genoa and other Italian cities. However, it was in the succeeding centuries when numerous banking functions took place.
BEGINNING OF COMMERCIAL BANKING
-The bankers of the Mediterranean cities were the direct ancestors of modern commercial banking.
-The first real public bank, Banco della Piazza di Rialto in Venice, was founded in 1587.
-funds for “pious works”
-These were managed by religious confraternities; however, these funds were also used as loans to traders, particularly those involved in the Galleon trade.
-This became the forerunner of banking institutions in the Philippines started by Father Juan Fernandez de Leon in 1754.
-This ended in 1820.
-In 2000 BC, temples in Babylon are considered sacred places under protection of gods, thus, they were considered safe deposits.
-Igibi bank in ancient Babylon flourished in 6th century BC.
The Coming of Foreign Banks
The opening of the Suez Canal in 1869 greatly increased Philippine trade.
-When Queen Isabel II had been dethroned by the revolution in 1868, the bank shortened its name to Banco Español-Filipino. It financed crops for exports and established correspondent relations in Spain and France to assist the European trade.
-In 1873, the Chartered Bank of India, Australia and China established its branch in Manila.
-Banking was performed during 4th century BC through temples, public bodies and private firms.
-The Greek system was then adopted in Egypt, then in Rome.
Public notaries were established throughout the Roman Empire in 2nd century AD. Despite the fall of the Roman Empire dismantling their banking system, banking began to regain prominence in Europe several centuries later.
-Trade and commerce expanded in Europe.
-Italian cities became centers of warehouse trade.
-International trade affairs were set up: the most famous were in Champagne, France.
-Non-negotiable bill of exchange was established.
-The legal doctrine of negotiability gradually developed.
-Fugger family of Europe was the greatest moneylenders; however, most of them were unsuccessful.
BANKING IN ENGLAND
The nature of their banking was mostly concentrated on granting loans to the crown, collection and transmission of papal revenues, and financing of foreign trade.
GOLDSMITHS STARTED BANKING
In 1640, Charles I, in great need of money, seized the deposits of city merchants worth £200,000 of bullions deposited with the mint for safekeeping.
Since the goldsmiths had strong facilities, the merchants entrusted to them the safekeeping of their money, gold bullions and other valuables.
GOLDSMITHS STARTED BANKING
However, the goldsmiths took advantage of this “trust”, using the money of merchants in expanding their money lending business, and thus generating profit there from.
This undesirable conditions in the banking system paved the way for the foundation of the Bank of England in 1694.
The Rise of Banks
The arrival of Governor Jose Basco y Vargas in 1778 paved the way for the economic development of the Philippines.
-He organized in 1781 the Economic Society of Friends of the Country which stressed the development of agriculture, commerce and industry.
-King Ferdinand VII abolished the monopoly of the Galleon Trade and the privileges of the Royal Company if the Philippines.
-Other very important economic development was the opening of Manila to world trade.
Earliest Filipino Banks
The first Filipino bank was founded by Francisco Rodriguez in 1830, named Rodriguez bank.
-Later on other banks such as Garrido Bank and Tuazon Bank were established.
-In 1851, the first government bank was established by Governor Antonio de Urbiztondo. It was called the Banco Español-Filipino de Isabel II. This was granted charter in 1828. This is now the Bank of the Philippine Islands.
Two years later, Hongkong and Shanghai Bank organized its branch in Iloilo.
-British importers advanced loans to local producers of sugar against the delivery of the future products. Nicholas Loney, and English man, initiated such business with the sugar planters. He also introduced modern machinery into the sugar industry which were used in Negros, Pampanga and Tarlac.
-Monte de Piedad y Caja de Ahorros de Manila (now Monte de Piedad and Savings Bank), the first savings bank, was established in 1882 by Father Felix Huertas from unused funds of the obras pias.
The Need for Rural Credit
In answer to the credit needs of the small farmers, the First Agricultural Bank of the Philippine Government was founded in 1906. In 1919, the assets and liabilities of the said bank were transferred to the newly-organized Philippine National Bank.
During the American Period (1900-1941), bank supervision was introduced. In 1900, the First Philippine Commission placed all banks under the Bureau of Treasury.
The Need for Rural Credit
The Insular Treasurer was authorized to supervise and examine banks and banking activities.
In 1929, the Bureau of Banking took over the supervision of banks. The said bureau was under the Department of Finance, and was headed by the Bank Commissioner.