Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

1bp260 Banking and Financial Institutions > 6 nonbank finance > Flashcards

6 nonbank finance Flashcards

1
Q

Financial systems – 2 types

A
  1. Bank-market oriented system (GER, JAP, CR)
  2. Capital-market oriented system (USA, UK)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The Czech financial market (structure) (2017)

A
  1. deposits in credit institutions (68.4%)
  2. investment funds (10%)
  3. pension funds (6.8%)
  4. insurance technical reserves (5.9%)
  5. currency in circulation (9%)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Types of institutions

A

1) Contractual savings institutions
o Pension funds (41tril.)
o Insurance companies (24 tril.)
2) Investment intermediaries
o Hedge funds (3.1)
o Sovereign wealth funds (8.2)
o Exchange traded funds (ETF) (4.5)
3) Private equity (5.5)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Pension funds

A

Income payments on retirement (employers, unions, or private individuals can set up pension plans, which acquire funds through contributions paid in by the plan’s participants)

o World pension funds in 2017 = USD 41
trillion!
o But a 2008 fall to $25.9 trillion from $31.7 trillion in 2007 as a result of the global crisis

Hidden pension fund liabilities -> Planet Ponzi is coming!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Example of Ponzi Planet

A

Madoff and the social security system

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Aging

A

Aging means a bigger problem than the 2007-2009 global financial crisis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Insurance Companies

A

o Hedging against „bad“ events - the occurrence of certain catastrophic events that could lead to large financial losses/operational risk in banking
o Lower liquidity risk than banks – different situation during the global crisis (but AIG/credit derivatives)
o World insurance funds in 2017= USD 24.0 trillion
o Solvency II = regulation of the EU insurance industry since 2016

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

types of insurance companies

A
  1. Life Insurance Companies
    o Sell policies that provide income if a person dies, is incapacitated by illness, or retires.
    o Hold illiquid long-term assets
  2. Property & Casualty Insurance Companies (P&C)
    o specialize in policies that pay for losses incurred as a result of accidents, fire, or theft.
    o Hold more liquid assets
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

World’s largest insurers (name, country, assets)

A
  1. MetLife Inc. (US, 898.764.000)
  2. AXA S.A (France, 895.060.390)
  3. Allianz SE (Germany, 886.110.008)
  4. Prudential Financial Inc. (US, 783.962.000)
  5. Japan Post Insurance Co., Ltd. (Japan, 722.063.689)
  6. Nippon Life Insurance Company (Japan, 651.309.074)
  7. Berkshire Hathaway Inc. (US, 620.854.000)
  8. Prudential pic (UK, 578.928.969)
  9. Legal & General Group plc (UK, 575.675.633)
  10. Assicurazioni Generali S.p.A. (Italy, 549.187.216)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

reinsurance company, top 5

A

A reinsurance company insures insurance
companies
1. Munich Reinsurance company
2. Swiss Re Ltd.
3. Berkshire Hathaway Inc.
4. Hannover Ruck S.E.4
5. SCOR S.E.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Investment intermediaries

A

o Hedge funds (3.1)
o Sovereign wealth funds (8.2)
o Exchange traded funds (ETF) (4.5)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Hedge funds

A

o a special type of mutual fund – for wealth individuals and institutions
o global hedge funds in 2017 = USD 3.1 trillion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

top 10 hedge funds

A
  1. Dridgewater Associates (USA)
  2. AQR Capital Management (USA)
  3. Man Group (UK)
  4. Two sigma Investments (USA)
  5. Millenium management
  6. Winton Group (UK)
  7. Renaissance Technologies (USA)
  8. Baupost Group (USA)
  9. Elliott Management Corporation (USA)
  10. BlackRock (USA)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Structure of a typical hedge fund

A

Investor
/ I \
fund administrator - hedge fund - custodian
\ / \ /
Hedge Fund Manager Prime Broker/dealer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Institutional investors in hedge funds (2012)

A
  1. Individuals (20%)
  2. Fund of funds (25%)
  3. Pension funds (22%)
  4. Corporations & other (25%)
  5. Endowments and foundations (8%)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Regulation of hedge funds

A

o Hedge funds – “a scape goat“ of the crisis
o The hedge fund industry has faced calls for stricter regulation in recent years.
o Although hedge funds did not play a major role in the emergence of the credit crisis it is alleged that they contributed to volatility through short-selling transactions and selling shares as a result of deleveraging and redemptions (Financial Stability Board).
o US - The Private Fund Investment Advisers Registration Act 2009 (mandatory registration of hedge funds)
o EU - Europe. In April 2009 - proposal for a Directive on Alternative Investment Fund Managers (AIFMD)
o Higher regulation of OTC markets rather than regulation of hedge funds

16
Q

Sovereign wealth funds (SWF)

A

o SWFs = special purpose investment funds or arrangements, owned by the general government.
o Created by the general government for macroeconomic purposes, SWFs hold, manage, or administer assets to achieve financial objectives, and employ a set of investment strategies which include investing in foreign financial assets.
o SWFs funding = balance of payments surpluses, official foreign currency operations, the proceeds of privatisations, fiscal surpluses, and receipts resulting from commodity exports.
o Importance of SWF investments in late 2008
o SWF assets in 2017 = USD 8.2 trillion

17
Q

TOP 10 global SWFs (USD billions) (name, country, origin)

A
  1. Government Pension Fund - Global (Norway) (Oil)
  2. China Investment Corporation (China) (Non-comodity)
  3. Abu Dhabi Investment Authority (UAE, Abu Dhabi) (Oil)
  4. Kuwait Investment Authority (Kuwait) (Oil, non-comodity)
  5. Sama Foreign Holdin (Oil)
  6. Hong Kong Monetary Authority Investment Portfolio (Hong Kong) (Non-comodity)
  7. SAFE Investment Company (China) (Non-comodity)
  8. GIC Private Limited (Singapore) (Non-comodity)
  9. Qatar Investment Authority (Qatar) (Oil)
  10. National Social Security Fund (China) (non-comodity)
18
Q

SWF investment trends (7)

A
  1. financial services
  2. real estate
  3. energy
  4. infrastructure
  5. industrials
  6. materials
  7. telecomm.
19
Q

Exchange-traded funds (ETFs)

A

o ETFs = A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange (investopedia.com).
o The rapid growth of ETFs (from $ 0.9tr in 2008 to $ 4.5tr in 2017) – increasing complexity, opacity and interconnectedness – high potential risk

20
Q

Private equity (PE)

A

o PE = an important source of funds for startup and young firms, firms in financial distress and those seeking buyout financing
o PE in 2017 = USD 5.5 trillion
o Uncertainty about regulatory changes.
o US - changes in capital gains tax laws.
o Europe new disclosure requirements, harmonised governance standards, and limits on leverage -> reducing the number of alternative investment funds that European institutional investors such as pension funds have access to.

21
Q

TOP 10 private equity firms

A
  1. The Blackstone Group
  2. Sycamore Partners
  3. Kohlberg Kravis Roberts
  4. The Carlyle Group
  5. TPG Capital
  6. Warburg Pincus
  7. Advent International Corporation
  8. Apollo Global Management
  9. EnCap Investments
  10. CVC Capital Partners

1bp260 Banking and Financial Institutions (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions