Types of Financial institution

Introduction:

A Financial institution is defined as an establishment that deals with money or

financial transactions with the general public or a specific group of customers.

The types of Financial Institutions may vary from country to country but the most
common ones are listed below.

1. Central Bank
2. Commercial Banks
3. Credit Unions
4. insurance Companies
5. Building societies
6. Micro lending agencies
7. Government agencies

Follow the link below and read up on the types of the types of financial institutions.

Financial institutions

Credit Unions

A credit Union is a financial institution whose owners have a shared

interest. They contribute to a pool of funds to provide low cost loans
to members who need it.

A credit Union is different from most other financial

institution because of ownership and voting rights.

In a credit Union the members who have money invested are

considered owners of the business. This is not the same for other
financial institutions, as with the commercial bank one is considered
a client upon opening an account.

In the credit union the owners elect a Board to manage the business
for them, however, they can make decisions through voting at
Annual General Meetings. The owners all have one vote as it is a
democratic process, this is irrespective of the amount of money they
have invested.

Read more by selecting the link below

Credit Unions

The image gives an idea how credit unions operate

Role and function of regulatory bodies

Financial Institutions are companies engaged in the business of dealing with

monetary transactions, such as deposits, loans, investments and currency
exchange in a country.

Since financial institutions are especially important to a country, they

sometimes need guidance to maintain certain requirements, restrictions with
an aim to maintain the integrity of the financial system. This regulation may be
handled by either a government or non-government organization.
Although some industries operate in the private sector, their
roles are deemed important to the society and as such they may
need some level of regulation to ensure they are carrying out their
functions properly as well as not exploiting the consumers.

The Images below indicate ways in which the central bank act as a
regulatory agency in the Financial Sector.

Ways to manage personal income

People use the factor of production i.e., labour as a source of
earning a salary. This income earned during the productive years is
expected to be that which provides for present needs and
future needs l when the earning capacity is severely reduced.
 One of the most effective ways to manage personal income is the
use of a budget. A budget is a financial plan for the future. It lists
the expected income as well as the expenditures for the budgeting
period.

The retirement age range within the Caribbean is 60-70 years old.
This means that a person must budget their income to have enough
money to last them after they retire.

Take a look at the picture below. Do you think you can make a budget for
your allowance or income?

A budget requires you to look ahead and make predictions or estimate your
expected income as well as those expenses that must be paid. It is
important to make provisions for savings or investment as well.

This picture give an

illustration of person's persona
monthly budgets.

Savings vs Investment
Introduction:

Many times business students hear people use the

terms savings and investments interchangeably. The fact is these are related
terms but they are very different.

Short term and Long Term Financing

Introduction:

A Business organization has need for money irrespective of where it is in the

company's life. Businesses need money to pay for stock, salaries ,invest in new
technology and other capital investment needs.

This need for money will allow it to explore sources of finance. The business can
look internally or externally and they will have to explore short term or long term
sources of finance.

Please use the Prezi presentation below to explore the options for financing
available to a business, then select the link below it for additional reading

Personal sources of capital for business

Financial institutions are normally unwilling to provide finances for

an entrepreneur if they have not personally invested in the business
venture. This means that the entrepreneur must find some of this
capital for themselves.
 Capital refers to resources needed not only to start but to operate
the business.

One challenge with sourcing finance for capital is that in some forms
of business the owner is seen as a single entity with the business, so
any loan taken is normally to the entrepreneur and not to the
business, so the risk is personal.

This is the reason entrepreneurs must research and plan before they
invest, because the failure of the business has implications for them
personally.

Look at the image, what options would you sele

a source of finance for your business

Basic Financial Records for Sole Trade

The Balance sheet shows the financial position of a business as at a

particular day. This means that unlike that Trading and Profit and
Loss account, that normally represent a period e.g. 1 year, the
balance sheet of a business changes daily.
 The balance sheet normally show the balances on assets, liabilities
and capital as at a particular date

Look at the image below, it provides details on a balance sheet and how it is
prepared.

Take a
look at
the
features
of the
balance
sheet