Banking management

Part 1
Subject:

1. Bank Activities in the Economy

2. Bank Position in the Money
Market
3. Questions and practice
Bank Activities in the Economy

 Financial Institutions consist of:

a. bank financial institutions, and
b. non-bank financial institutions.
 Financial institutions play a role as a
means in implementing financial
policies.
Bank Activities in the Economy

 Bank financial institutions play a role

as providers of funds for financing or
investment that can encourage
increased production of goods and
services, thereby contributing to
increasing national growth.
Types of Banks
Types of Banks
 Types of banks (continued)
According to the Indonesian Banking Architecture (API) 2004:
Banks that aim at international business scope with the
capacity and ability to operate in the international region
Bank that has a very broad business scope and national
operations
Banks whose business activities are concentrated in certain
business segments.
Rural Credit Banks and banks whose business activities are
limited.
Bank as an Economic Chain
Bank Position in the Money Market

• Banks play a role in mobilizing funds,

namely collecting funds from the public and
channeling them in the form of credit.
• Fund mobilization is realized through the
process or mechanism of monetary policy.
Bank Position in the Money Market
• Monetary policies reduce the interest rate of
money so that demand for credit increases, so
the production of goods and services
increases so that goods and services marketed
domestically and abroad also increase, which
in turn increases people's income and vice
versa.
• Balance in all sectors is a country's economic
development goals.
Bank Position in the Money Market
Caption :
• Changes in the money market can cause changes in
the goods and services market and vice versa.
• Declining interest rates will encourage increased
investment or working capital and vice versa.
• If the factor of production is in full capacity  the
increase in production causes an increase in factor
prices which then ignores the prices of goods and
services. This means that the price increase of goods
is not caused by the monetary sector but is caused by
the sector riil.
Caption:
• Conversely, if the price of a product
in the market is low or there is an
excess of product in the market, so
entrepreneurs suffer losses can be
resolved by increasing exports.
• An increase in exports will increase
the amount of foreign exchange or the
amount of foreign currency entering
the country is greater.
Caption (continued) :

• If the bank's financial institutions do

not work well and the economic
conditions are unemployment, the
owner of the funds will not keep the
money in the bank but spend it
(public spending increases).
Caption (continued) :

• In the short term, public expenditure can

encourage increased production, but in the
long run it is difficult to increase
production due to inflation caused by high
public spending.
• Financial institutions can influence the
money supply in the community to prevent
inflation.
 practice

Work on questions from book

page 8 no 1-3.
Terima kasih