BSBA Financial Management

BANKING AND FINANCIAL INSTITUTIONS

ACTIVITY LEARNING 01

NAME: VERDE, VINCE KRISTIAN S.

PROGRAM & SECTION: FIN232

PART I. ESSAY

5pts each question (3points content & 2points sentence construction)

1. Why do you think Government NBFIs are essential in promoting financial stability, economic growth,
and the reduction of income inequality?

~ These institutions reach wide range of people, as they can provide to those who may not have much
access on traditional banking services. They also provide people wide range of financial services, such as
pension and investment funds, insurance, loans, and other financial services like banking institutions,
which help people be invested on financing. Not only that, but they also provide financing to small and
medium-sized enterprises so they can keep their business running, in improving the economy growth of
the country. They also serve as an alternative source of financing, meaning they help diversify the
financial system, which helps in reducing the risk of financial crisis.

2. What are the key distinctions between investments and insurance, and why are both essential
elements of a sound financial plan?

~ In my own words, insurance act as a protection, a financial protection. Individuals pays their insurance
so that when unwanted events occur such as accidents, illnesses, or death, the companies that handles
their insurances will provide financing to them. Insurance is like a security for them. Investments,
however, are those financing activities that helps grows an individual’s wealth. Investments helps
individuals to grow money by lending money to companies, and these companies can help grow their
money when they got profit, sharing it to their lenders/investors. Both are essential when making a
financial plan since as mentioned before, insurance acts as a protection, a security as you can’t predict
happenings in this world. And when this unfortunate event happens to you, insurance can help ease the
burden by providing financial help such as covering bills, medication, or provide financial help to your
family. For investing, it can help you grow and learn more about financing, where you will learn how to
grab opportunities in your hands to have a prosperous life.

3. Describe the importance of setting financial goals and how investments and insurance can help
individuals achieve them?

~ Setting up your financial goals can help you have a direction to go to. Having a goal can motivate you,
can help give you the drive that you need to follow the path to success. This also allows you to learn find
effective ways on how you will handle your money and be familiarize with financial services that can help
you reach that financial goal such as learning to invests and having an insurance. Learning to invests can
help you in a way that you can grow your money by becoming an investor into companies. And having an
insurance act as a protection to not hinder your progress on reaching that goal.

SM Dasmariñas Complex Governor's Drive Sampaloc 1 City of Dasmariñas, Cavite, 4114

 BSBA Financial Management

4. How does a credit cooperative differ from more established financial institutions like banks and what
does it do?

~ Credit cooperative is typically under management by the members of the cooperative. They are formed
by people who shared a common bond, benefiting from the emphasis of community support and sharing
favorable interest rates. Each member of the credit cooperative pool their money together and the money
can be used as a source of loans and other financial services for the cooperative. They mostly help those
people who can’t afford to have the same services from banks, such as those who have low income or
poor credit histories.

5. Do you believe that credit cooperatives can contribute to BSP's campaign for financial inclusion? How
do they give underserved and marginalize communities access to financial services?

~ With full honesty, I am a bit skeptical. Forming a credit cooperative can pave the way for community
growth, as well as a way for people who doesn’t have much access to financial institutions to learn more
about financing, being able to expose those people in the world of financing. On the other hand, since
they are inexperienced, there are chances where they can’t handle their funds well, as living in a low
income with high price market, some people might find it a way to abuse it as a way for them to buy the
needs, which can result in mismanagement of funds. When that happens, the money they invested can
be left in thin air. In short, recovery would be a problem when unfortunate events might happen. Even so,
I think it could help contribute to the campaign, as said before, it is a way for people to learn about
financing, for sectors who can’t afford the same services they get from traditional banking such as low-
income workers, by providing them access to financial services, such as charging lower rates or fees
compared to traditional banks on loans and giving high interest rates on savings.

SM Dasmariñas Complex Governor's Drive Sampaloc 1 City of Dasmariñas, Cavite, 4114