COMPARISON OF THE FINANCIAL

SYSTEMS IN VARIOUS COUNTRIES

Comparing Financial Systems

Information and differences
between United States of America
and Philippines
• Introduction

There are many dimensions to compare between different countries’ I

financial systems. One dimension is the efficiency of each financial
market. There have been many studies on the efficiency of financial
markets.

Financial systems are crucial to the allocation of resources in a modern

economy. They channel household savings to the corporate sector and
allocate investments funds among firms; and they enable households
and firms to share risks. These functions are common to the financial
systems varies widely. In United States and the United Kingdom
competitive markets dominate the financial landscape, whereas in
France, Germany, and Japan banks have traditionally played the most
important role.
 For example, financial markets may be
bad for risk sharing; competition in banking
maybe inefficient; financial crises can be
good as well as bad; and separation of
ownership and control can be optimal.
Financial institutions are not simply veils,
disguising the allocation mechanism
without affecting it, but are crucial to
overcoming market imperfections. An
optimal financial system relies on both
financial markets and financial
intermediaries
• ROLE OF FINANCIAL SYSTEM IN ECONOMIC
DEVELOPMENT OF A COUNTRY

Financial systems help in growth of capital market

Government Securities market
Financial system helps in infrastructure and growth
Employment growth is boosted by financial system
Financial system helps in fiscal discipline and control of
economy
Financial system’s role in Economic Integration
Role of financial system in political stability
• The United States Financial Systems

• The U.S financial system is easily the largest in the

world although that position stands to be challenged by
a unified European financial market and, in many
respects, the most advanced. It also has the greatest
diversity of institutions, the widest variety of
instruments, and the most highly developed derivative
markets. In many areas of finance, it leads in
innovation. Because of these anomalies, which are
apparent to even the most casual student of financial
systems.
• Basic Characteristics of the U.S Financial System

• The U.S financial system possesses three

characteristics that differentiate it from the
financial systems of other countries. These are its
extreme degree of fragmentation , as reflected in
the enormous number of individual institutions; its
unparalleled degree of diversity; and the relative
importance of direct finance, i.e., the raising of
funds by the issue of open-market instruments
such as stocks, bonds, and commercial paper.
• The Philippine Financial Systems

• The Philippine financial system is structured by

type of bank including universal, commercial,
savings and cooperative banks, according to
statistics complied by Asianbanks.net from
noted bank adviser Paul Sheehan. Although the
country’s banking system primarily consists of
rural and thrift banks, universal and commercial
banks account for larger market shares.
• Universal and commercial banks make up less than 5
percent of the total banking institutions in the Philippines
but account for a much larger portion of the market
share, explains data from Asianbanks.net. Universal and
commercial banks differ from the banking institutions by
offering a wider variety of financial services according to
Investopedia. In the Philippines, these banks have asset
values of over 3 trillion pesos, making up over 90
percent of the banking market share in the country. The
Philippine financial system consists mainly of rural
banks, which make up the majority of total banking
institutions, notes Asianbanks.net.