Finance School of management Chapter 2: The Financial System Objective Understanding the workings of the financial system Determining rates of retur uesTc
1 Finance School of Management Chapter 2: The Financial System Objective •Understanding the workings of the financial system •Determining rates of return
Finance School of management Chapter 2 Contents What is a financial Financial market Rates System Financial Intermediaries The flow of funds Financial Infrastructure The functional and regulation Perspective Governmental quasi Financial Innovation Goⅴ ernmental he“ Invisible hand” Organizations Financial markets uesTc
2 Finance School of Management Chapter 2 Contents ❖ What is a Financial System ❖ The Flow of Funds ❖ The Functional Perspective ❖ Financial Innovation & the “Invisible Hand” ❖ Financial Markets ❖ Financial Market Rates ❖ Financial Intermediaries ❖ Financial Infrastructure and Regulation ❖ Governmental & QuasiGovernmental Organizations
Finance School of management What is the Financial System? The financial system encompasses markets Intermediaries other institutions used to carry out the financial decisions of households business firms. and governments uesTc
3 Finance School of Management What is the Financial System? ❖ The financial system encompasses – markets – Intermediaries – other institutions used to carry out the financial decisions of households, business firms, and governments
Finance School of management What is the Financial System Exchanges over-the-counter(OTC, off-exchange) markets Financial intermediaries providing financial services and products banks, investment companies, and insurance companies checking accounts, commercial loans, mortgages, mutual funds, insurance contracts and many other contracts financial markets and intermediaries are linked through networks and global in scope governed by the regulatory institutions uesTc
4 Finance School of Management ❖ Exchanges & over-the-counter (OTC, off-exchange) markets ❖ Financial intermediaries – providing financial services and products – banks, investment companies, and insurance companies – checking accounts, commercial loans, mortgages, mutual funds, insurance contracts and many other contracts ❖ Financial markets and intermediaries are – linked through networks and global in scope – governed by the regulatory institutions What is the Financial System?
Finance School of management The flow of funds Markets Surplus Units Deficit Units Intermediaries uesTc
5 Finance School of Management The Flow of Funds Markets Intermediaries Surplus Units Deficit Units