Financial System
THE PHILIPPINE FINANCIAL SYSTEM
2.1 Basic Building Blocks of a Financial System
Financial System is the system that allows the transfer of money between savers (and investors). It can operate on a global, regional or firm specific level. Gurusamy, writing in Financial Services and Systems has described it as comprising "a set of complex and closely interconnected financial institutions, markets, instruments, services, practices, and transactions”.
Basic building Blocks of Financial System
1. Money – used to buy goods & services, and acts as a store of value.
2. Financial Instruments – formal obligations that entitle one party to receive payments or a share of assets from another party. Ex: loans, stocks, bonds.
3. Financial Markets – places or networks where financial instruments can be sold quickly & cheaply.
4. Financial Institutions – are firms that connect borrowers and lenders, provide savers and borrowers access to financial instruments & markets.
5. Central Banks – large financial institutions that handle government finances, they regulate the supply of money and they serve as banks to commercial banks.
2.2 Financial Decisions of Household and Corporations
Financial Decisions are resolutions or conclusions made by people or a business entity in other to make good future.
Some Financial Decisions of Corporation:
1. Determining the proper amount of funds to employ in a firm.
2. Selecting projects and capital expenditure analysis.
3. Raising funds on the most favorable terms possible.
4. Managing working capital such as inventory and accounts receivable.
Some Financial Decisions of a Household:
1. Choosing mortgages.
2. Saving fund for college education and retirement.
3. Deciding how to pay for health care and insurance.
4. Investing in the stock market.
2.3 Roles of Financial Market
In Finance: Financial Markets Facilitate Raising of the capital (in the capital market) the transfer of risk (in the derivatives markets)
2.1 Basic Building Blocks of a Financial System
Financial System is the system that allows the transfer of money between savers (and investors). It can operate on a global, regional or firm specific level. Gurusamy, writing in Financial Services and Systems has described it as comprising "a set of complex and closely interconnected financial institutions, markets, instruments, services, practices, and transactions”.
Basic building Blocks of Financial System
1. Money – used to buy goods & services, and acts as a store of value.
2. Financial Instruments – formal obligations that entitle one party to receive payments or a share of assets from another party. Ex: loans, stocks, bonds.
3. Financial Markets – places or networks where financial instruments can be sold quickly & cheaply.
4. Financial Institutions – are firms that connect borrowers and lenders, provide savers and borrowers access to financial instruments & markets.
5. Central Banks – large financial institutions that handle government finances, they regulate the supply of money and they serve as banks to commercial banks.
2.2 Financial Decisions of Household and Corporations
Financial Decisions are resolutions or conclusions made by people or a business entity in other to make good future.
Some Financial Decisions of Corporation:
1. Determining the proper amount of funds to employ in a firm.
2. Selecting projects and capital expenditure analysis.
3. Raising funds on the most favorable terms possible.
4. Managing working capital such as inventory and accounts receivable.
Some Financial Decisions of a Household:
1. Choosing mortgages.
2. Saving fund for college education and retirement.
3. Deciding how to pay for health care and insurance.
4. Investing in the stock market.
2.3 Roles of Financial Market
In Finance: Financial Markets Facilitate Raising of the capital (in the capital market) the transfer of risk (in the derivatives markets)