Financial Institutions

-is an organization
that handles financial
transactions for
individuals, groups,
and other
organizations

–profit, nonprofit,
private, or
government-owned
-
Types of Financial
Institutions
1. Depository Institution

2. Nondepository
Institution
Depository Institution

-manages money that

is deposited by
individuals and
organizations
Nondepository
Institution
-serve as
intermediaries
between savers and
demanders of funds,
or individuals,
households, and other
businesses who need
additional funds to
support personal
needs or business
operations
 Financial
Institutions

“Financial
Intermediaries”
Financial products

“Financial
Instruments”
 Financial
Intermediaries
-they facilitate the flow of
funds between the savers
and demanders of funds in
an economy or a financial
system
 Financial
Instruments
-a document which
signifies a legal or
binding agreement
between two parties
 Types of Financial
Institutions

1. Commercial Banks
2. Savings and Loans
3. Credit Unions
4. Investment Banks
5. Insurance Companies
6. Brokerage
7. Investment Companies
Commercial Banks

-accept deposits
from individuals
and organizations
that have excess
funds and provide
loans to those
who need or want
to borrow money
Savings and Loans

-it also known as

thrift banks
-dedicated to
residential
mortgages
 Credit Unions

-associated with
or are an offshoot
of cooperatives
-usually profit
sharing between
members at the
end of fiscal year
Investment Banks

-perform the task

of an intermediary
which facilitates
the transactions
of individuals &
institutions in
investing
Insurance Companies

-they operate on
the principle of
pooling of risks
wherein premiums
are collected from
clients
 Brokerage

-facilitate the
buying and selling
of securities
-earns through
commissions
 Brokerage

Discount brokerage
firms
-allow their clients
to do their own
research about
investment options

Full service
brokerage firms
-provide clients
advice and help
them manage their
investment portfolio
Investment Portfolio

-is a collection of
financial products
owned by a single
investor
Investment Companies

-are corporations
wherein individuals
and other
organizations invest
in investment
portfolios that are
managed by
professionals who are
tasked to keep track
of market trends and
the performance of
different financial
products or
instruments
Financial
Market
-means for
the buying
and selling
of stocks,
bonds, and
other
financial
instruments
-
 Financial
Transactions
- The exchange
of funds
between people
and
organizations
with surplus
funds and those
who want to
borrow or need
money take
place in the
financial markets
Money Markets
-the markets where
transactions involving
short-term debt securities
take place
Examples:

Treasury bills
Commercial paper
Negotiable
certificates of deposit
issued by
government,
businesses, and other
financial institutions
Capital Markets
-where
transactions
involving long-
term debt, or
those maturing
in more than one
year, take place
Role of Financial
Intermediaries in
Financial Markets

1.Reduce Costs
2. Diversification
3.Pooling of Funds
4. Financial
Flexibility
 Role of Financial
Intermediaries in
Financial Markets

1.Reduce Costs
-offer to particular
individuals and firms
who needs access
additional funds
2.Diversification
-intermediaries help
savers of funds
lower their risk by
helping them choose
the types of financial
products that they
will include in their
portfolio
 Role of Financial
Intermediaries in
Financial Markets

3. Pooling of funds
-intermediaries can
pool funds from
several savers in
order to grant to a
single borrower a
4.Financial loan involving a huge
sum of money
Flexibility
-intermediaries offer
a variety of financial
products to both
savers and
borrowers of funds
 Most Common
Financial Instruments

1. Savings

2. Loans

3. Bonds

4. Security

5. Treasury Bills

6. Insurance Products

7. Mutual Funds
 Savings

-It offers relative liquidity

-is low-risk

-investor earns minimal

interest on this type of
investment
 Savings Account
Regular account
-one where the
depositor is issued
a passbook

Time deposit
-where the
depositor is issued
a time deposit
certificate
 Loans

-the interest rate that

thet charge on the loans
is higher than what they
pay to the depositors
 Bonds

-is a loan granted to other

organizations by
individuals and
organizations with excess
funds
 Security

-means that he or she has

a financial instrument
signifying ownership of
stocks of a publicly traded
company, or a bond
issued by a government
agency
 Treasury Bills

-they yield no interest but

are sold at a discount
Insurance Products

-brought by policyholders
from insurance
companies as protection
of both life and property
 Mutual Funds

-based on the pooling of

funds from different
investors
 Flow of Funds in a
Business Organization

Suppliers of Funds Demanders of

(those who h ave surplus Funds
money) (in the form of loans
and/or investment from
 Individuals/ the suppliers)
Households
• Individuals/
• Organizations(profit & Households
nonprofit)
• Organizations (profit
• Government and nonprofit)

• Government
 Career in Finance

1.Banker/Investment Banker
2.Insurance Agent/Broker
3.Financial Advisor
4.Stockbroker
5.Fund Manager
6.Academe
7.Corporate Consultants
8.Country Manager
9.Corporate Finance
Manager/Officer
10.Chief Finance Officer
Banker/Investment
Banker
-someone who has just
finished college or has had
some special training in
finance will normally start
as bank clerk and move his
or her way up the
corporate ladder
Insurance Agent/
Broker
- sell insurance
products

-give financial
advice to their
clients
Financial Advisor

-Selling of
investment
products
 Stockbroker

-licensed to
facilitate the
buying and
selling of stocks
for investors
 Fund Manager

-they manage
funds pooled by
several
investors
 Academe

-finance professional
chooses to be
academe and teach,
he or she will be
required to obtain a
master’s degree
 Corporate
Consultants
-expertin the field
who was tapped to
address specific
problems or issues
Country Manager

-employed by a
multinational firm

-tasked to oversee
the operations of an
affiliate in the
host(foreign) country
Corporate Finance
Manager
/ Officer
-is financial analysis,
which encompasses risk
assessment ,return on
different investment
options , preparation and
analysis of financial
statements , ensuring that
cost control measures are
in place in all cross-
functional areas and that
those are communicated
to other department
heads, and treasury.
 Chief Finance
Officer
-one of the members of
the top management team

-responsible for managing

all the financial aspects of
the business-
Qualities of a Finance
Professional
1. Integrity
2. Attention to detail
3. Strong oral and written
communication skills
4. Ability to multitask
5. Analytical
6. Ability to think strategically
7. Ability to use tehnology
8. Team player
9. Leadership
10. Flexibility
Qualities of a Fiance
Professional

Integrity

-defined as a strong
quality of being
honest

-it is a strong
adherence to moral
standards anf
uprightness
Qualities of a Fiance
Professional

Attention to detail

-the decision makers,

have to be complete
and accurate
Qualities of a Fiance
Professional

Strong oral and written

communication skills

-who possesses the

ability to
communicate well
would be more
effective in carrying
out all those tasks
and responsibilities
Qualities of a Fiance
Professional

Ability to multitask

-must be capable of
wearing many hats
and still be focused
on key issues that
affect the financial
well-being of the
organization
Qualities of a Fiance
Professional

Analytical

-is one who has the

ability to interpret
data and discover
underlying reasons
that would explain a
particular situation
Qualities of a Fiance
Professional

Ability to think
strategically

-entails having the

ability to come up
with plans that are in
line with the firm’s
vision,mission, and
objectives
Qualities of a Fiance
Professional

Ability to use
technology

-helps in
safeguarding
confidentiality and
integrity of financial
information

-helps finance
professional deepen
his or her analysis of
data and enhance his
or her reports
through visualization
techniques
Qualities of a Fiance
Professional

Team player

-ability to work in a
collaborative
environment is
imperative
Qualities of a Fiance
Professional

Leadership

-capacity to lead
people
Qualities of a Fiance
Professional

Flexibility

-has to adapt, and

adapting entails
being updated on
current trends in
industry practices,
policies, and
procedures, and
regulations

-needs to be kept
abreast with what
the competitors are
doing
It’s END!