Business Finanace Flashcards
What is a financial institution?
Institutions that act as a financial intermediary in channeling funds from lenders to borrowers or from savers to investors
Examples of financial institutions
central bank, commercial banks, credit unions, insurance companies, building societies, government agencies
Roles of the central bank
- issues notes and coins to commercial banks
- managaes foreign exchange reserves
- regulates the economy through monetary policy
- lends money to commercial banks if necessary
Roles of commercial banks
- provides a save place for deposits
- offer loans to the public
- offers standing orders
- offers investments
- accepts deposits for lending activities
What is a credit union?
A non-profit cooperative that allows its members to borrow money from pooled deposits at reasonable rates of interest
What is a building society?
These are owned by their members and lend money for mortgage. The money is from the members who have saving accounts with the building society
What are insurance companies?
These protect businesses and individuals from financial loss in case of an unforseen event. It also provides financial protection in case of death or poor health
What are micro-lending agencies?
These provide small loans for those who dont qualify for loans from larger institutions or those with low or irregular incomes
Government agencies
ministry of finance, ministry of commerce, public accounting committee
Functions offered
loans or credit facilities
savings and deposits
making payments
investments
Services offered
night safe deposits
online banking
credit/debit cards
deposit boxes
What is a financial regulatory body?
The different bodies governing or regulating the policies for financial institutions
What are financial regulations?
rules governing how financial institutions that receive deposits and make loans can do
List financial regulatory bodies
central bank, financial services commission, independent statuary bodies
The regulatory role of the central bank
issues banking licenses
charge minimum reserve requirements
varying the liquid assets ratio
regulating inflation and unemployment through monetary policy
What is the FSC?
The Financial Services Commission is a regulatory agency established by the government with the responsibility of regulating non bank financial institutions
Roles of the FSC
ensures:
institutions follow operation guidelines
businesses are transparent and easy to understand
business are fit and proper to operate
Central bank functions include
controls the currency
manages public debt
issues treasury bills
promote financial stability
Ways to manage personal incomes
saving, investment, budgeting, getting financial advice
What is investment?
the risk of spending money on capital goods or financial instruments with the hope of making a profit later
List forms of investment
stock market
government securities
mutual funds
Types of shirt tern financing
trade credit
commercial bank loans
promissory notes
installment credit
indigenous credit or private money lenders
Types of short term loans
advances from customers
debt factoring
venture capitalists
crowd funding
angel investors
Types of long term financing
loans from government agencies
mortgages
debentures
