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Understanding the Philippine Financial Environment:

Markets and Institutions

UNIVERSITY OF THE EAST


2219 Recto Ave, Sampaloc, Manila, 1008
Metro Manila, Philippines

Macroeconomics Theory And Practice


BEC 113
Prepared by:

ATIENZA, Von Lester L.


REBAO, Montesa Joy R.
RESULTA, Ronalyn C.
SAN ANDRES, Trishia D.

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Understanding the Philippine Financial Environment:
Markets and Institutions

Philippine Financial System

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Philippine Financial System

Financial System
On a regional scale, the financial system is the system that enables lenders
and borrowers to exchange funds.
It is (within the scope of finance) a system that allows the exchange of funds
between lenders, investors, and borrowers.
It is made of intricate and complex models that portray financial services,
institutions and markets that link depositors with investors.
It is the set of implemented procedures that track the financial activities of the
company.

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Philippine Financial System

Financial System
The term Financial System is comprised of two words- Finance and System.
Finance means monetary resources comprising ownership funds and debts.
System indicates a set of interrelated parts working together to achieve some
purpose.
The financial system of an economy exists to organize the settlement of
payments, to raise and allocate finance, and to manage the risks associated
with financing and exchange.

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Philippine Financial System

Two General Roles of the Financial System


to mobilize surplus funds from people and organizations; and
to allocate them among deficit people and organizations

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Philippine Financial System

Components of
Financial System

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Philippine Financial System

Financial System Participants


There are six participants in the financial system. They are:
1. Household or consumers are generally described as
that group receiving income, majority of which typically
come from wages and salaries.

2. Financial institutions or intermediaries Financial


institutions/intermediaries are the firms that bridge the
gap between the surplus units (SUs) or investors/lenders
and the deficit units (DUs) or borrowers.

3. Non-financial firms - are the businesses other than the


financial institutions or intermediaries.

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Philippine Financial System

Financial System Participants


4. The government - the national, provincial, city, and
barangays or towns compromising the Philippines as a
whole.

5. The central bank assures that the country has a stable


and healthy financial system.

6. Foreign participants refer to the participants from the


rest of the world.

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Philippine Financial System

Bangko Sentral ng Pilipinas


The Bangko Sentral ng Pilipinas (BSP) was created by the Republic Act No.
7653, otherwise known as the New Central Bank Act of 1993.

The BSP is the Philippines central monetary authority that provides policy
directions in the areas of money, banking and credit.

The BSPs powers and functions are exercised by its Monetary Board,
consisting of seven members appointed by the president of the Philippines.

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Philippine Financial System

The BSPs Organizational Structure as of January 23, 2017

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Philippine Financial System

Executive Management Services a collective term for all departments/offices


directly reporting to the Monetary Board or to the Governor
Functional Sectors
Monetary Stability Sector- mainly responsible for the operations/activities
related to monetary policy formulation and implementation
Supervision and Examination Sector mainly responsible for the regulation
of banks and other BSP-supervised financial institutions
Resource Management Sector mainly responsible for the management of
human, financial, and physical resources of the Bank
Security Plant Complex responsible for the production of Philippine
currency, security documents, and commemorative medals and medallions

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Bangko Sentral ng Pilipinas and the Banking
Institutions and Non-Bank Financial Institutions

BANGKO SENTRAL NG PILIPINAS

NON-BANK FINANCIAL
BANKING INSTITUTIONS
INSTITUTIONS

PRIVATE BANKING GOVERNMENT


INSTITUTIONS BANKING
INSTITUTIONS

Thrift Development Land Bank Philippine


Commercial Banking Rural Banks Bank of the
Institutions Banks of the Amanah
Philippines Philippines Bank

Ordinary Savings &


Commercial Universal Mortgage
Banks Banks Banks

Private
Development
Banks

Savings &
Loan
Association

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Bangko Sentral ng Pilipinas and the Banking
Institutions and Non-Bank Financial Institutions
NON-BANK FINANCIAL
INSTITUTIONS

Private Non-Bank Financial Institution Government Non-Bank


Financial Institution
Investment Banks
Government Service
Finance Companies Insurance System

Securities Dealers/Brokers Social Security System

Pawnshops

Lending Investors

Fund Managers

Trust Companies/Departments

Insurance Companies

Etc.

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Philippine Financial System

Banking Institutions
Private Banking Institutions
Commercial Bank is a financial institution that provides various financial
service, such as accepting deposits and issuing loans.
Ordinary Commercial Banks these are banks which perform all kinds of
banking functions such as accepting deposits, advancing loans, credit
creation, and agency functions.
Universal Banks may offer credit, loans, deposits, asset management,
investment advisory, payment processing, securities transactions,
underwriting and financial analysis.
Thrift Banks - are engaged in accumulating savings of depositors and
investing them.
Savings & Mortgage Bank - a bank that primarily or exclusively offers
loans to clients to purchase real estate, especially of private residences.

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Philippine Financial System

Banking Institutions
Private Development Bank dedicated to fund new and upcoming businesses and
economic development projects by providing equity capital and/or loan capital.
Savings & Loan Association is a financial institution that specializes in savings
deposits and mortgage loan.
Rural Banks are the more popular type of banks in the rural communities.
Government Banking Institutions
Development Bank of the Philippines - provides various banking products and services
to the agricultural and industrial enterprises.
Land Bank of the Philippines - is a government financial institution that strikes a
balance in fulfilling its social mandate of promoting countryside development while
remaining financially viable.
Philippine Amanah Bank - providing, among others, reasonable medium and long-term
credit facilities to the people of the Muslim-dominated provinces of Cotabato, South
Cotabato, Lanao del Sur, Lanao del Norte, Sulu, Basilan, Zamboanga del Norte,
Zamboanga del Sur and Palawan.

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Philippine Financial System

Non-banking Institutions
Private Non-bank Financial Institutions
Investment Banks is a financial intermediary that performs a variety of
services for businesses and some governments.
Finance Companies is a specialized financial institution that supplies credit
for the purchase of consumer goods and services by purchasing the time-
sales contracts of merchants or by granting small loans directly to consumers.
Securities Dealers/Brokers is a person or firm in the business of buying and
selling securities, operating as both a broker and a dealer, depending on the
transaction.
Pawnshops offers secured loans to people, with items of personal property
used as collateral.
Lending Investors actively looks for individuals with excess capital to invest.

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Philippine Financial System

Non-banking Institutions
Fund Managers - is responsible for implementing a fund's investing
strategy and managing its portfolio trading activities.
Trust Companies/Departments - is a legal entity that acts as a fiduciary,
agent or trustee on behalf of a person or business entity for the purpose of
administration, management and the eventual transfer of assets to a
beneficial party.
Insurance Companies - provides coverage, in the form of compensation
resulting from loss, damages, injury, treatment or hardship in exchange for
premium payments.

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Philippine Financial System

Non-banking Institutions
Government Non-bank Financial Institutions

Government Social Insurance System is mandated to provide and


administer the following social security benefits for government employees:
compulsory life insurance, optional life insurance, retirement benefits,
disability benefits for work-related contingencies and death benefits.

Social Security System - A system of federally funded services and payments


to help support the needy, the aged, and the temporarily unemployed as well
as providing support for needy, dependent, disabled, or neglected children,
rehabilitation for the disabled, and a host of other social services.

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Understanding the Philippine Financial Environment:
Markets and Institutions

Sectors and Stakeholders

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Sectors and Stakeholders

Sectors of the Financial System


The Philippine financial system is composed of a formal and informal financial sector that
is either regulated or non-regulated.

The financial sector is a category of stocks containing firms that provide financial
services to commercial and retail customers. This sector includes banks, investment
funds, insurance companies and real estate. Financial services perform best in low
interest rate environments. A large portion of this sector generates revenue from
mortgages and loans, which gain value as interest rates drop.

The formal financial sector includes banking institutions that are authorized to provide
credit and accept deposits from the general public. Non-bank institutions are also part of
the formal financial sub-system. These non-bank institutions are authorized to provide
credit but are not allowed to accept deposits from the public.

The informal financial sector is composed of a variety of organized and singular sources
of credit

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Sectors and Stakeholders

Stakeholders of the Financial System


The term stakeholders refer to all the people who are formally or informally
involved with and affected by the corporate governance of a business.
Stakeholders are interested in financial aspects of an organizations performance
and management.

The following are the stakeholders in a financial market institution:

Shareholders/Investors provide capital needed to run a business, and they


expect a return for their investments.

Board of directors are the topmost responsible people in a corporate body.


Selected by the shareholders, the board members are responsible for
developing corporate policies, strategies, procedures, and more to guide the
institution toward success. They are also responsible and accountable to
stakeholders for financial performance.

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Sectors and Stakeholders

Stakeholders of the Financial System


Managers are accountable for the internal controls in the institution. Their
jobs focus on implementing the policies, strategies, and procedures.

Employees are the one employed in an institution that performs specific


tasks in accomplishing the organizational goals.

Communities and Government are closely tied external stakeholders.


Companies operate within communities, and their activities affect more than
just customers, while government entities make decisions that can significantly
impact a company's operations.

Public - public stakeholders rely on credible disclosures from financial


institutions. However, these people are responsible for their own actions
related to the financial firm; they do not influence the firm directly.

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Sectors and Stakeholders

Stakeholders of the Financial System


Internal Auditors are part of the audit committee of a financial institution.
They report directly to top management or to the board of directors. These
people are responsible for assessing whether the firm is following accepted
accounting practices, internal controls set by the board, and industry
regulations.

External auditors the shareholders appoint external auditors to express an


opinion about the financial information that the financial institution discloses
and to assess the firms risk and how that risk is being managed.

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Understanding the Philippine Financial Environment:
Markets and Institutions

Philippine Financial Markets and


Institutions

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Philippine Financial Markets and Institutions

The Financial Markets


Financial markets are markets which cater to the financial needs of
individuals, firms and institutions required for short as well as for long period.
Financial markets could also mean:

1.The mechanism that facilitate the parking of surplus money of individuals, firms
and investment bankers to earn return.
2.Organizations that facilitate the trade in financial products i.e. Stock exchanges
facilitate the trade in stocks, bonds and warrants.

Hence, financial market is a mechanism that allows people to easily buy


and sell (trade) financial securities (such as stocks and bonds), commodities
(such as precious metals or agricultural goods), and other fungible items of value
at low transaction costs and at prices that reflect the efficient market hypothesis.

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Philippine Financial Markets and Institutions

Financial markets facilitate:

1.The raising of capital (in the capital markets);

2.The transfer of risk (in the derivatives markets); and

3.International trade (in the currency markets)

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Philippine Financial Markets and Institutions

Financial market include different sub-markets:

1.Money markets, which provide short term debt financing and investment

2.The capital markets consist of primary markets and secondary markets. Newly formed
(issued) securities are bought or sold in primary markets. Secondary markets allow
investors to sell securities that they hold or buy the existing securities

3.Commodity markets, which facilitate the trading of commodities.

4.Derivatives markets, which provide instruments for the management of financial risk.

5.Future markets, which provide standardized forward contracts for trading products at
some future date.

6.Insurance markets, which facilitate the redistribution of various risks.

7.Foreign exchange markets, which facilitate the trading of foreign exchange.

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Philippine Financial Markets and Institutions

The financial markets are broadly and commonly divided into two types:

1. Money Market

2. Capital Market

Money Market

is the market which deals with short-term funds in the economy.


it refers to the institutional arrangements facilitating borrowings and lending of short-
term funds.
It is the market in which financial institutions, mainly banks lend and borrow money or
near money assets from each other, trade in securities, treasury bills and other financial
instruments such as certificates of deposits or enter into agreements such as Repos and
Reverse Repos.
in a money market, funds can be borrowed for a short period varying from a day, a
week, a month or 3 to 6 months, sometimes up to one year and against different types of
instruments, such as, treasury bills, bill of exchange, bankers acceptances, and bonds
etc., called near money.

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Philippine Financial Markets and Institutions

The basic functions of money market are:

To provide efficient mechanism for adjustment of liquidity positions of


commercial banks, non-bank financial institutions, business firms and other
investors.

To provide a platform for the central bank of the country to control and manage
the money supply and the liquidity in the economy.

To bridge between short term surpluses and deficits.

To provide a realistic price for short term money.

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Philippine Financial Markets and Institutions

Participants who enters into the transactions in the money market are:

1.Central Government
2.State Government
3.Public Sector Undertakings
4.Scheduled Commercial Banks
5.Private Sector Companies
6.Provident Funds
7.Life Insurance Companies
8.General Insurance Companies
9.Mutual Funds
10.Non-banking Financial Companies
11.Primary Dealers

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Philippine Financial Markets and Institutions

Participants who enters into the transactions in the money market are:

1.Central Government
2.State Government
3.Public Sector Undertakings
4.Scheduled Commercial Banks
5.Private Sector Companies
6.Provident Funds
7.Life Insurance Companies
8.General Insurance Companies
9.Mutual Funds
10.Non-banking Financial Companies
11.Primary Dealers

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Philippine Financial Markets and Institutions

Capital Market

the term capital market refers to the institutional arrangements for facilitating the
borrowing and lending of long-term funds.
a capital market may be defined as an organized mechanism for effective and
efficient transfer of money or financial resources from the investing parties, i.e.
individuals or institutional savers to the entrepreneurs engaged in industry or
commerce and that would either be in the private or public sectors of an
economy.
all the long term capital needs are met by the capital market.
capital market is a central coordinating and directing mechanism for free and
balanced flow of financial resources into the economic system operating in a
country.

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Philippine Financial Markets and Institutions

Functions of Capital market:

1.Provides a platform for raising long term funds

2.Acts as an intermediary between buyers and sellers of securities

3.Facilitates an organized trading mechanism for stock and securities.

4.Provides a standard price for the securities.

5.Connection between savings and investment.

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Philippine Financial Markets and Institutions

Classification of Capital market

Capital markets consist of:

1.Stock markets, which provide financing through the issuance of shares or


common stock, and enable the subsequent trading thereof.

2.Bond markets, which provide financing through the issuance of Bonds, and
enable the subsequent trading thereof.

3.Derivative market where derivative products like stock futures, index futures
and options are traded. Financial derivative is an agreement between two parties
for buying or selling an underlying asset (Stock or index) whose value is derived
from the underlying financial assets or claim.

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Philippine Financial Markets and Institutions

In terms of the access, the financial market can be classified as primary


market and secondary market.

1.Primary market is the market where initial issues are sold and bought. When a
company issues shares for the first time, it is trade through primary market. The
primary market is facilitated by the intermediaries like issue managers, issuing
banks, registrars, book-runners etc. who intermediate between investors and
issuers.

2.The secondary market consists of stock exchanges and over the counter
exchanges. In the secondary market the previously issued securities are sold and
bought and it passes from one investor to another. Stock brokers play an
important role as the intermediaries between stock exchanges and the investors.

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Philippine Financial Markets and Institutions

Financial Markets Structure

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Philippine Financial Markets and Institutions

The Financial Institutions


A financial institution is an establishment that conducts financial transactions
such as investments, loans and deposits.

Commercial Banks
- commercial banks accept deposits and provide security and convenience
to their customers.
- commercial banks also make loans that individuals and businesses use to
buy goods or expand business operations, which in turn lead to more deposited funds
that make their way to banks.

Investment Banks
- an investment bank is a financial intermediary that performs a variety of
services for businesses and some governments. These services include underwriting
debt and equity offerings, acting as an intermediary between an issuer of securities
and the investing public, making markets, facilitating mergers and other corporate
reorganizations, and acting as a broker for institutional clients.

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Philippine Financial Markets and Institutions

The Financial Institutions


Insurance Companies
- insurance companies pool risk by collecting premiums from a large
group of people who want to protect themselves and/or their loved ones against a
particular loss, such as a fire, car accident, illness, lawsuit, disability or death.
Insurance helps individuals and companies manage risk and preserve wealth.
- by insuring a large number of people, insurance companies can
operate profitably and at the same time pay for claims that may arise. Insurance
companies use statistical analysis to project what their actual losses will be within
a given class.

Brokerages
- a brokerage acts as an intermediary between buyers and sellers to
facilitate securities transactions. Brokerage companies are compensated via
commission after the transaction has been successfully completed.

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Philippine Financial Markets and Institutions

The Financial Institutions


Investment Companies
- an investment company is a corporation or a trust through which
individuals invest in diversified, professionally managed portfolios of securities by
pooling their funds with those of other investors. Rather than purchasing
combinations of individual stocks and bonds for a portfolio, an investor can
purchase securities indirectly through a package product like a mutual fund.
-there are three fundamental types of investment companies: unit
investment trusts (UITs), face amount certificate companies and managed
investment companies. All three types have the following things in common:
An undivided interest in the fund proportional to the number of shares
held
Diversification in a large number of securities
Professional management
Specific investment objectives

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Philippine Financial Markets and Institutions

The Financial Institutions


Unit Investment Trusts (UITs)
- a unit investment trust, or UIT, is a company established under an
indenture or similar agreement. It has the following characteristics:
The management of the trust is supervised by a trustee.
Unit investment trusts sell a fixed number of shares to unit holders, who
receive a proportionate share of net income from the underlying trust.
The UIT security is redeemable and represents an undivided interest in a
specific portfolio of securities.
The portfolio is merely supervised, not managed, as it remains fixed for the life
of the trust. In other words, there is no day-to-day management of the portfolio.

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Philippine Financial Markets and Institutions

The Financial Institutions


Face Amount Certificates
- a face amount certificate company issues debt certificates at a
predetermined rate of interest. Additional characteristics include:
Certificate holders may redeem their certificates for a fixed amount on a
specified date, or for a specific surrender value, before maturity.
Certificates can be purchased either in periodic installments or all at once with
a lump-sum payment.
Face amount certificate companies are almost nonexistent today.

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Philippine Financial Markets and Institutions

The Financial Institutions


Management Investment Companies
- the most common type of investment company is the management investment
company, which actively manages a portfolio of securities to achieve its investment objective.
There are two types of management investment company: closed-end and open-end. The primary
differences between the two come down to where investors buy and sell their shares - in the
primary or secondary markets - and the type of securities the investment company sells.
Closed-End Investment Companies: A closed-end investment company issues shares in a
one-time public offering. It does not continually offer new shares, nor does it redeem its shares
like an open-end investment company. Once shares are issued, an investor may purchase
them on the open market and sell them in the same way. The market value of the closed-end
fund's shares will be based on supply and demand, much like other securities. Instead of
selling at net asset value, the shares can sell at a premium or at a discount to the net asset
value.
Open-End Investment Companies: Open-end investment companies, also known as mutual
funds, continuously issue new shares. These shares may only be purchased from the
investment company and sold back to the investment company. Mutual funds are discussed in
more detail in the Variable Contracts section.

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Philippine Financial Markets and Institutions

The Financial Institutions


Bond
- a bond is a debt investment in which an investor loans money to an entity (typically
corporate or governmental) which borrows the funds for a defined period of time at a variable or
fixed interest rate. Bonds are used by companies, municipalities, states and sovereign
governments to raise money and finance a variety of projects and activities. Owners of bonds are
debt holders, or creditors, of the issuer.
Characteristics of Bonds:
Most bonds share some common basic characteristics including:
Face value is the money amount the bond will be worth at its maturity, and is also the
reference amount the bond issuer uses when calculating interest payments.
Coupon rate is the rate of interest the bond issuer will pay on the face value of the bond,
expressed as a percentage.
Coupon dates are the dates on which the bond issuer will make interest payments. Typical
intervals are annual or semi-annual coupon payments.
Maturity date is the date on which the bond will mature and the bond issuer will pay the bond
holder the face value of the bond.
Issue price is the price at which the bond issuer originally sells the bonds.

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Philippine Financial Markets and Institutions

The Financial Institutions


Equities
- stocks grant investors an equity stake in a corporation. In exchange for buying stocks,
investors become eligible for perks such as quarterly dividend distributions, which are payments
made from a company's excess profits.
- equity investors also obtain the right to vote on major corporate happenings, such as
a merger with another company or a change in corporate governance.

Fixed Income
- fixed income investments represent loans that investors extend to corporations or
government bodies.

Bankruptcy
- when a company falls into bankruptcy, it may mean that both equity and fixed income
investments are lost.

Consideration
- equities and fixed income investments respond differently to financial conditions. As a
result, these two investment categories are considered non-correlated to one another.

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Understanding the Philippine Financial Environment:
Markets and Institutions

SWOT Analysis of the Philippine


Financial System

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Understanding the Philippine Financial Environment:
Markets and Institutions

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Understanding the Philippine Financial Environment:
Markets and Institutions

Policies, Problems, Concerns and


How to Address Them

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Policies, Problems, Concerns and How to
Address Them
Introduction
A financial system allows the exchange of funds between
lenders, investors, and borrowers.

The Philippine financial sector/market:

banks (commercial banks whose operations include investment


banking, thrift banks, rural banks, and development banks)

non-bank institutions (insurance companies, finance


companies, pension funds, and the securities markets).

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The Philippine financial sector/market:

dominated by a banking system


highly concentrated, with the six largest commercial
banks controlling around 60% of all bank assets

Bangko Sentral ng Pilipinas

the official central bank in the Philippines


achieve monetary stability
use its resources towards the improvement of the
standard of living

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Policies, Problems, Concerns and How to
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The Financial Markets: Policies and Problems

Efficient Financial Markets


mobilize resources in the economy for productive investment
and channel resources to activities that will promote growth,
allow businesses to produce more goods and hence, generate
more jobs

Operational Efficiency - mobilize and allocate funds at minimal


cost
Allocational Efficiency - mobilize funds from savings with the
lowest opportunity cost and distribute these funds to
investments that offer the highest potential returns

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Policies, Problems, Concerns and How to
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Key Factors that Affects the Financial System:


Financial Resources
Banking System
Non-Bank Financial institution
Challenges Encountered :

Improving Asset Quality

Managing Risk Exposure

Developing the Domestic Capital Market

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Improving Asset Quality


dispose of and mobilize private investment to clean up banks
balance sheets and rehabilitate the banking system

Managing Risk Exposure


give banks greater flexibility to respond to changing opportunities
under a more deregulated environment and at a time of rapid
technological advances and allow banks to take risks so long as
they demonstrate their ability to manage and price those risks.

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Developing the Capital Market


Reform initiatives:
Establishment of a private sector-led fixed
income exchange
The institutionalization of third-party
custodianship for securities
Creation of unit investment trust funds (UITFs) to
replace common trust funds (CTFs)
Upgrading of the payment and settlement system
into a real time gross settlement system (RTGS)
Development of domestic rating capacity

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Policies, Problems, Concerns and How to
Address Them

Issues Arising:
Financial Stability
Integrated Regulator (s)
Financial Transparency
Deregulation of Financial Market
Rapid Financial Innovation
Space Age Technology

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Problems encountered by the Philippine Financial System


1. Heightened instability, low investor confidence and ineffieciencies
arising from structural impediments
2. Banks have not provided substantial intermediation to the market
3. Non-bank financial subsector remains underdeveloped
4. Equity market remains shallow with little growth
5. Small insurance subsector is plagued by restrictive legislation and
regulation
6. Weak financial supervision continues to lower investor confidence
7. Lack of appropriate insurance products to deal with national
disasters and catastrophies

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Heightened instability, low investor confidence and


ineffieciencies arising from structural impediments

Inadequate intermediation between savers and


investors, and limited access to finance

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Address Them

Banks have not provided substantial intermediation


to the market
Philippine banks tend to invest in a small number of
top-tier creditworthy firms due to an inability to
accurately judge credit risk.
uneven distribution of financial delivery channels
constrains the provision of basic financial services
such as credit, savings, payment transfers,
remittances, and insurance

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Equity market remains shallow, with little growth

The small market size and limited turnover increase


the risk of insider dealing and market manipulation.

Cross shareholdings and limited disclosure make it


difficult to track intercompany transactions and
exposures.

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Non-bank financial subsector remains underdeveloped

nonbank financial subsector is still too small to


compensate for the limited level of bank
intermediation

Corporate issuance has been constrained by tax and


regulatory disincentives that constrain potential
investors as well as a weak insolvency regime

The limited supply of investment products and


vehicles, such as open-end mutual funds, has
discouraged small investors
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Small insurance subsector is plagued by restrictive


legislation and regulation

Life insurance premiums represent less than 1% of


gross domestic product and have shown nominal
growth
Restrictions on expanding the range of insurance
providers, as well as on microinsurers introducing
nonlife products
Tax distortions also hamper development efforts
State-owned Government Services Insurance
System competes directly with the private market

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Weak financial supervision continues to lower investor


confidence.
Lack of fiscal and administrative autonomy and
suppressed budget has compromised SECs ability
to develop and retain staff with the skill sets
necessary to provide an overall enabling
environment for capital market development while
assuring financial stability at the same time.

In the absence of timely reforms, the financial sector


will remain vulnerable to systemic risks, and
investors will be vulnerable to fraud and misconduct.

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Address Them

Lack of appropriate insurance products to deal with


natural disasters and catastrophies.

the underinsurance of national assets and the


absence of affordable, market-based insurance
products for residential and small and medium
enterprise property owners, represent a significant
and potential liability for Government in the event of
a major earthquake in a highly urbanized city

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Promote further deepening of the financial system


through the balanced development of the banking
system and capital market.

These reforms are anchored in an enabling


environment, progressive adoption of international
standards and best practices, and good governance
and transparency

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Addressing Problems in the Philippine Financial System

Focus of reforms:
I. promoting savings generation at the regional level but
institutionalizing deployment of resources at the national level
II. developing an enabling environment for long-term savings
III. strengthening the governance framework of the financial system
in line with international standards and best practices
IV. establishing a strong legal framework for financial sector
development
V. strengthening capital market development planning
VI. improving market functions
VII. Strengthening overall supervision and regulation

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Policies, Problems, Concerns and How to
Address Them

promote the use of alternative products and delivery


channels to reach underserved and unserved areas of
the country, including microinsurance, a credit security
fund program, and microhousing.
establish a strong legal framework to support financial
sector development and to enhance financial stability.
The existing microprudential approach to supervision will
be supplemented with macroprudential policies to ensure
the resilience of the financial system

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Policies, Problems, Concerns and How to
Address Them

mandated credit to certain sectors of the economy such


as small and medium-sized enterprises and the
agriculture sector.
develop cooperative financial services and
microinsurance based on public-private partnership
approach to ensure its sustainability, rather than
becoming directly involved as service provider.
develop insurance cover for strategic national assets that
are presently uninsured (e.g. schools, roads, bridges,
airports, and railways) with complementary insurance
provided for middle class residential and business
owners.

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Thank You!

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