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 I

countries’ 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.