FINANCIAL

MANAGEMENT
An Overview of
Financial System
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Two Important Markets

▫ Product Market

▫ Financial Market
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Financial Markets – Basic Concepts

▫ Financial markets are the media for the creation of financial assets and
financial liabilities.
▫ Unlike the market for physical assets, they need not be evidenced by a
regular venue for the auction of the assets for sale, although a stock
market may be the closest counterpart of a goods market on this
aspect.
▫ Issuer of the Financial Assets
▫ Terms and Conditions (Financial Instrument)
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Financial Markets – Basic Concepts

▫ Financial Instrument
▫ Financial Intermediaries
There are two channels for distribution of savings to investment units:
a. One is through a direct issue of financial assets by borrowers to lenders.
b. Same transaction is channeled' through a financial intermediary, such as
banks, insurance companies, brokers and underwriters.
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Several advantages or roles have been claimed which are unique to

certain financial institutions, helping establish the importance of
financial intermediation in advanced financial markets.
1. Term transformation
2. Scale economies with diversification
3. Technical expertise
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The Philippines Financial Markets

▫ Money Market
Money market serves two essential functions in the financial markets.
a. Financial institutions can transact reserves-related business.
b. The money market provides savers with other alternative types of financial
instruments to hold their assets.

▫ Capital Market
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Financial Institutions
▫ Bank Financial Institutions
- Commercial Banks
- Off-shore Banks
- Rural Banks
- Thrift Banks
▫ Non-Bank Financial Institutions
- The Government Financial Sector
- The Informal Financial System
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Keep safe everyone.