00 Flashcards
Well-functioning financial system is crucial to the country’s economic health
Philippine financial system
When financial system breaks down = severe economic hardship result (like in Russia and southeast asia recently)
Philippine financial system
Has the basic function of moving funds from those who have a surplus to those who have shortage of funds
Philippine financial system
Private Banking Institutions
- Expanded Commercial Banks/Universal Banks (EKB/UB)
- Commercial Banks (KB)
- Thrift banks (TB)
- Rural banks
- Cooperative Banks
types of thrift banks
- Savings and mortgage Banks (SMB)
- Private development Banking (PDB)
- Stocks Savings and Loan Associations (SSLA)
Non-bank Financial Institution
- Investment House
- Investment Bank
- Securities dealers
- Savings and loan association
- Financing companies
- Mutual Fund
- Pawn shop
- Lending investor
- Pension Fund
- Insurance Companies
- Credit Unions
Government Non-bank financial institutions
- GSIS
- SSS
- Pag-ibig or HDMF (Home Development Mutual Fund)
The evolving philippine financial system
- Political reforms: tax reforms and greater infrastructure spending = projected to drive domestic growth in 2018 (higher spending in government and households)
- Four regulatory agencies to counteract the downside risk and to ensure smooth functioning of the philippines financial system (BSP, SEC, Insurance Commission, Philippine Deposit Insurance)
Four regulatory agencies to counteract the downside risk and to ensure smooth functioning of the philippines financial system
BSP
SEC
Insurance Commission
Philippine Deposit Insurance
Political reforms: tax reforms and greater infrastructure spending =
projected to drive domestic growth in 2018 (higher spending in government and households)
Signs of Growth in Domestic Market
Three Major Segments of Philippine Financial System
Three Major Segments of Philippine Financial System
The Philippine Banking System
Total assets of Insurance Industry
Securities market
The Philippine Banking System growth
- Double digit assets growth since Jan 2016
- Latest data shows total resources of banking system = 17.3 trillion of pesos increase by 12%
Total assets of Insurance Industry growth
- Doubles by 2008 to 2016
- Steady increase relative to GDP revenue
Securities market growth
- Growth in the bond market
- Comprised peso denominated government insured securities
Regulatory Landscape
- Alignment with global standard = Principles for sound liquidity risk management and supervision
- Deepening capital market
- Strengthening surveillance
Function of Financial Systems
- savings
- liquidity
- payment
- risk
- policy
Element of financial systems
- financial claims
- financial institution
- financial market
- government agencies
- laws and policies
Fr Juan Fernandez de Leon started the first credit institution in the Philippines, the Obras Pias, which translated to pious works.
1754
Francisco Rodriguez establish the Rodriguez bank
1764
The first Philippine bank, Banco Espanol- Pilipino de Isabella de II was instituted.
1851
The Suez Canal was opened, consequently expanding Philippine trade with other nations.
1869
Branches of the Chartered Bank of India Austria, and China were built in Manila
1873
In the height of the Spanish colonization, British banks ruled the economy Nonetheless, Spain was able to establish their first bank in the Philippines, the Monte de Piedad.
1882
The treaty of Paris was signed, giving way to free trade between the US and the Philippines through the Payne Aldrich Act.
1898
The International Banking Corporation of New York built a branch in The Philippines: however, in 1915, it was acquired by the National City Bank of New York.
1902
The Postal Saving Bank was established.
1904
The first Agricultural Bank of the Philippine Government was founded. Ten years later, it would be transferred to the newly founded Philippine National Bank.
1906
Chinese banks were built in the country.
1920
because of Japanese colonization, the Philippine National bank was forced to close, but was reopened within a few months under the provisions of the Japanese Military. Also during the Japanese period, war notes were circulated, resulting in the worst inflation in history.
1942
Any commercial bank
Performs investment house function + commercial banking authority
Invest in the equities of allied or non-allied enterprises
Allied may be financial or not
Expanded Commercial Banks/Universal Banks (EKB/UB)
Any commercial bank, confined only to commercial bank function
Accepting drafts and issuing letters of credit, discounting and negotiating promissory notes, drafts, and bills of exchange, and other evidence of debt
Accepting or creating demand deposits, receiving other types of deposits substitute, buying and selling of foreign exchange, gold or silver bullions
Acquiring marketing bonds and other debt securities
Extending credit subject to such rules
Commercial Banks (KB)
Accumulate the savings of depositors and invest them together with their capital, loan secured by bonds, mortgage in real estate and insured improvements thereon, chattel mortgages, bonds and other forms of security or loan for personal or household finance, secured or unsecured, in financing or home development
Thrift Banks (TB)
Readily marketable and debt securities, in commercial papers and accounts receivables, drafts bills of exchange, acceptance or notes arising out of commercial transaction and in such other investment and loan which the Monetary Board may determine as necessary in the furtherance of national economic objective
Thrift Banks (TB)
focuses on promoting homeownership, accepts deposits, provide savings account, offering mortgage loan
Savings and mortgage banks (SMB)
Any corporation organized for the purpose of accumulating the savings of depositors and investing them, together with its capital, in readily marketable bonds and debt securities
stock Savings and mortgage banks (sSMB)
Checks, bills of exchange, acceptances or notes arising out of commercial transaction or in loans secured by bond, mortgage or real estate transaction and insured improvements or other form of securities
Savings and mortgage banks (SMB)
fostering economic growth and development, providing financial support and resources; offer loans, equity, and financial services to projects promoting infrastructure, industries, and sustainable development
Private development banking (PDB)
Bank that exercises all the power and assumers all the obligation of the saving and mortgage bank (General Banking Act) except as otherwise stated
Private development banking (PDB)
Help to construct and expand and rehabilitate industrial sectors
Private development banking (PDB)
Government counterpart of private development banking
Development Bank of The Philippines
Helps the private development banks augment their capitalization as provided under RA 4093 as amended
Development Bank of The Philippines
an institution where individuals or entities can hold shares, representing ownership, and the institution provides services typical of savings and loan associations, such as accepting savings deposits and providing mortgage loans
Stock savings and loan associations (SSLA)
Any corporation engaged in the business of accumulating the saving of its member or stockholders and using such accumulated funds together with its capital for loan and investment or in securities of the government and its instrumentalities
Stock savings and loan associations (SSLA)
Are primarily engaged in servicing the needs of households = personal finance and long term financing for home building and development
Stock savings and loan associations (SSLA)
Any bank authorized by the central bank to accept deposits and make credit
Rural Banks (RB)
Available to farmers, businessmen and cottage industries in rural areas
Rural Banks (RB)
Loans = may be granted by rural security of land without torrens title; private property can show 5 years or more peaceful continuous and uninterrupted possession of the land
Rural Banks (RB)
Banks established to assist various cooperatives
Cooperative banks
Lends funds at reasonable interest
Cooperative banks
controlled and owned by the government; manage government funds; facilitate public expenditure financial services to government agencies; improve monetary and fiscal policies
Government Banking Institutions
Provides loan for development purposes
Development bank of the Philippines (DPB)
Agriculture, commercial, industrial sector
Development bank of the Philippines (DPB)
Provide financial support in support in implementation of agrarian reform program
Land bank of the Philippines (LBP)
RA 6048 - provides a charter bank
Philippine Al-Amanah Islamic Investment Bank
Authorizes the bank to promote and accelerates the socio-economic development of ARMM
RA 6048 - provides a charter bank
Provides banking, financing, and investment operations
Philippine Al-Amanah Islamic Investment Bank
To establish and participate in agriculture, commercial, and industrial ventures based on Islamic concept of banking
Philippine Al-Amanah Islamic Investment Bank
entities providing financial services but not classified as traditional banks; diversify the financial sector, offer specialized financial products like insurance, investment, leasing, and money market activities; governed by specific regulations based on their financial activities
Non-bank financial institution
specialized in investment-related services
Investment houses
offer a range of services including underwriting, advisory, and facilitating financial transactions
Investment banks
provides various types of loans and credit facilities;
Financing companies
financial intermediaries facilitating the buying and selling of securities (stocks, bonds) in financial market
Securities dealers/brokers
specialized in savings deposits and mortgage lending; promote homeownership by providing loans for real estate and accepting savings deposit
Savings and loan association
investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities
Mutual funds
provides short-term collateral-based loans
Pawnshop
individuals or entities that provide loans to borrowers in exchange for interest or fees; offer alternative financing options beyond traditional banks
Lending investors
investment funds set up to provide income and financial security for retirees
Pension funds
provide coverage against specified risks in exchange for premium payments
Insurance companies
cooperative financial institution owned and operated by its members
Credit union
The cash flows through other bodies of the financial system
Savings
Often channeled into production of goods and into the money market
Savings
Without proper system in place stocks, bonds, and other income yielding investment, would not be easily cashed out when needed by investor
Liquidity
Ability to turn asset into cash
Liquidity
Insurance policies are made available for investors
Risk
Insurance policies lessens the risk people face for difference investments: health, properties, assets, income, life
Risk
Financial systems impact the economy of a country through affecting interest rates and inflation
Policy
entitle their owners, the creditors, to receive a payment or series of payments without any counter-performance from other institutional units, the debtors, who have incurred the counterpart liabilities
Financial claims
current collection services like credit cards, devit cards, and cheque issuing provides convenient process of paying
payment
