B1 - Financial instiutions. Flashcards
what is the definition of a financial institutions
Financial institutions are organisations that offer financial services to individuals and to businesses.
what do financial institutions include ?
The ability to
- deposit money.
- obtain credit
- make investments
- offering advice in matters of personal and business finance.
what are the 9 financial institutions ?
Bank of England, Banks , Building societies , Credit unions , Payday loans , Insurance companies, Pension companies, National saving and investment, Pawnbroker.
what is the definition of bank of England ?
It is the central bank of England and Wales which issues legal tender, manages the national debt and sets interest rates.
what is the definition of Banks ?
A bank is an institution that delas in money and its substitutes and provides other money related services.
what is the definition of building societies ?
A building society is a financial organization that is owned and run by its members.
what is the definition of credit unions ?
Credit unions is a non - profit cooperative whose members can borrow from pooled deposits at low interest rates.
what is the definition of Payday loans ?
Payday loans are short - term , high - interest loans based on your income. They are characterized by high interest rates.
what is the definition of insurance companies ?
an insurance company is a company that provides financial protection or reimbursement against losses from a policyholders risks.
what is the definition of pension companies ?
Pension companies offer employees security in retirement by providing a guaranteed income stream.
what is the definition of national savings ?
National savings are the sum of private and public saving.
what is the definition of investment ?
Investment is the act of putting money or effort into something to make a profit or achieve a result.
what is the definition of a pawnbroker
A pawnbroker is an individual or business that offers secured loans to people with items of personal property.
what are the advantages of the bank of England ?
- ensuring stability of money.
- Promoting financial innovation.
- fostering consumer protection.
what are the disadvantages of the Bank of England ?
- decisions can affect interest rates and inflation impacting businesses and consumers.
- It faces scrutiny and pressure from various stakeholders
what are the advantages of Banks ?
- safety of public wealth.
- availability in cheap loans.
- Development in rural areas.
what are the disadvantages of banks ?
- lower saving rates.
- high balance requirements or high maintenance fees.
- risk of fraud and public debt.
what are the advantages of Building societies ?
- better rates , They often offer competitive savings and mortgage rates.
- offer more specialized products.
- may provide a more personal experience than banks.
what are the disadvantages of building societies ?
- products may come with restrictions.
- may not be very convenient.
- less diversified.
what are the advantages of credit unions ?
- loans usually have lower interest rate.
- credit unions work to benefit members , not to generate profit.
- can be easier to access credit.
what are the disadvantages of credit unions ?
- limited branch and access.
- fewer products and services.
- limited operating hours.
what are the advantages of payday loans ?
- fast application process.
- small amounts can be borrowed.
- typically no credit check.
what are the disadvantages of payday loans ?
- high cost
- risk of debt
- not legal in all states.
what are the advantages of insurance companies ?
- provides financial assistance for individuals and businesses.
- helping in saving and investing.
- reducing the economic impact of disasters.
what are the disadvantages of insurance companies ?
- costly premiums
- risk of claim denial.
- fixed insurance benefits losing value due to inflation.
what are the advantages of pension companies ?
- investment risk protection.
- tax relief.
- employer contributions.
what are the disadvantages of pension companies
- employees have no control over how their pension money is invested.
- not all pensions transfer if you change employers.
- they’re difficult to access.
what are the advantages of National savings
- your money is totally secure as you’ re lending to the government.
- they offer different products such as premium bonds , saving bonds , savings account
what are the disadvantages of national savings
- interest rates are falling
- you could be investing.
- the money could boost your retirement.
what are the advantages of investment ?
- less tax.
- a saving plan that grows.
- investment is not limited to stocks.
what are the disadvantages of investment ?
- possibility of loss.
- opportunity cost.
- returns are not guaranteed
