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2ND SEM-FINALS > CENTRAL BANK, COMMERCIAL, THRIFT, RURAL, & NBFI > Flashcards

CENTRAL BANK, COMMERCIAL, THRIFT, RURAL, & NBFI Flashcards

1
Q

__________traditionally has serviced the financial
needs of people living in remote areas

A

Rural banking

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2
Q

_______may have relatively small and specialized
customer

A

rural banks

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3
Q

________ is wide and it not only provides
agriculture finance but also housing loan, car
finance, letter of credit, credit to big
companies and for many activities.

A

commercial banks

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4
Q

________is limited to agriculture finance,
small sector loans, handicrafts and other small
sector loans,

A

rural banks

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5
Q

A ____________is a financial institution that does not have a full
banking license and cannot accept deposits
from the public.

A

non-bank financial institution (NBFI)

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6
Q

___________ provide services that are not necessarily suited to banks, serve as competition to banks, and specialize in
sectors or groups.

A

non-bank financial institutions

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7
Q

_______ defines central bank as “ the main government-controlled bank in a country, which controls the financial affairs of the country by fixing main interest rates, issuing currency, supervising all other banks within the country and controlling the foreign exchange rate”

A

Collins

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8
Q

______ and _____ define central bank as “ an institution that is responsible for managing a nation’s money supply in its best interest”

A

Kidwell and Peterson

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9
Q

________ and _______ refers to “ the institution that a nation endows with power to manage and provide services to its money and banking system, and foreign exchange system”

A

Horvitz and Ward

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10
Q

_______ defines a central bank as an “official institution with broad responsibilities for a nation’s payments system; established to help maintain the liquidity of private banks”

A

Kohn

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11
Q

________ defines a central bank as “ the government agency that oversees the banking system and is responsible for the amount of money and credit supplied in the economy”

A

Mishkin

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12
Q

WHAT ARE THE OBJECTIVES OF CENTRAL BANK

A

to oversee the financial health of private banks
to maintain monetary and credit conditions that encourage a high level of employment
to assure a reasonably stable level of prices

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13
Q

WHAT ARE THE FUNCTIONS OF CENTRAL BANK

A
  1. as a bank of issue
  2. as the government’s banker, agent, and adviser
  3. as the custodian and manager of the nation’s
    international reserves
  4. as the lender of the last resort
  5. as the controller of credit
  6. as the agency for international monetary cooperation
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14
Q

It has the sole authority for
issue of currency in the country.

A

Central Bank

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15
Q

The ________ has the exclusive power and authority to issue
coins and notes for circulation in the
Philippines.

A

Bangko Sentral ng Pilipinas

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16
Q

What are the following are the reasons why the power solely granted to Central Banks:

A
  1. To bring about uniformity in note circulation and to attain effective supervision over such note issue indirectly
  2. To control the credit granting power of commercial banks through control of their demands for note currency
  3. To give prestige to the central bank
  4. To take advantage of the profits derived from the note issue, which provides a source of revenue for the government.
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17
Q

What functions of Central bank that state it has the sole authority for issue of currency in the country. The Bangko Sentral ng Pilipinas has the exclusive power and authority to issue coins and notes for circulation in the Philippines.

A

as a bank of issue

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18
Q

The central bank acts ________ as it conducts the banking transactions of the government and its various agencies.

A

as the government’s banker

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19
Q

As an agent of the government, the central bank
performs financial services.

A

➢ receive subscriptions for government loans
➢ pay interest due on the national debt
➢ administer and manage the national debt including the
issue and redemption of treasury bills, bonds and notes

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20
Q

What functions of Central bank provides advise and information to the government regarding the monetary and
financial conditions of the economy.

A

Government’s banker, agent, and adviser

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21
Q

What are two general purposes why banks are
required to keep reserves:

A
  1. To insure the solvency or liquidity of banks for the
    normal withdrawal needs of depositors. This purpose
    prevents “ bank runs” from starting or developing.
  2. To control or limit the amount that banks may grant.
    This requirement prevents unlimited credit expansion.
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22
Q

What functions of Central bank that states
* Banks are now required by law to put up as reserve an amount equivalent to a fraction of the bank’s deposit liabilities.
* To make sure that the required reserves are strictly adhered to, they are kept in custody of the central bank.

A

as the custodian and manager of the nation’s international reserves

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23
Q

What functions of Central bank that states : When banks fall short of funds, they attempt to borrow from other financing institutions. When funds are not available from any other source, their last resort is the central bank.

A

as the lender of the last resort

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24
Q

As a lender of last resort, the central bank is engaged in a range of activities include the following:

A
  1. rediscounting
  2. lending money to the government when in financial distress
  3. issuance of emergency notes in a monetary crisis
  4. buying of securities in the open market
  5. liberalizing or contracting of credit extension at its own initiative
  6. granting of emergency loans to banks in financial need
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25
Q

___________ is a privilege of qualified Bangko Sentral ng Pilipinas (BSP)-supervised banks that have approved and active rediscounting line with the BSP to obtain loans or
advances from BSP using the eligible papers of its end-user borrowers (EUB) as collaterals. It is a standing credit facility to help banks meet temporary liquidity needs by refinancing
the loans they extend to their clients.

A

Rediscounting

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26
Q

What functions of Central bank that states : Credit is an activity that can be used positively and negatively. When the right amount of credit is used productively to boost the nation’s chance for economic growth. When credit is granted in amounts more than the economy can take, the economy becomes prone to difficulties.

A

as the controller of credit

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27
Q

Credit can also be abused however, too much dependence on credit creates negative effects like:

A
  1. it leads to wasteful government spending
  2. it creates inflation
  3. it burdens future generations
  4. it dampens production of goods and services
  5. it reduces future consumption and savings
  6. as the agency for international monetary cooperation
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28
Q

_________ are important components of the overall
economic system of a country. Among these, banks play a major
role.

A

Financial institutions

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29
Q

Banks consist of the following types, what are they?

A
  1. commercial banks
  2. universal banks
  3. thrift banks
  4. specialized government banks
  5. rural banks
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30
Q

________ is a financial institution that accepts demand deposits and makes commercial loans, as well as offering the widest array of services of any financial institution. That provide services such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposits

A

Commercial bank

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31
Q

Commercial Bank may either be:

A
  1. Traditional
    2.
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32
Q

________ which is the usual institution with tellers,safe deposit boxes, vaults and ATMs.

A

Traditional

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33
Q

________those that do not have physical branches and requires all customers to complete all transactions by phone to internet

A

Emerging Non traditional

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34
Q

What are the Functions of Commercial Banks

A
  1. creating money
  2. payments mechanism
  3. pooling of savings
  4. extension of credit
  5. facilities for the financing of foreign trade
  6. trust services
  7. safekeeping of valuables
  8. brokerage services
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35
Q

With the commercial bank loan, money is created. When
a bank tends through the issuance of its own
promissory notes, money is created when the notes are
used to buy goods and services.

A

Creating Money

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36
Q

What Functions of Commercial Banks that states:
Commercial banks are equipped with an effective payment system.

A

Payment Mechanism

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37
Q

What Functions of Commercial Banks that states: Commercial banks are primary sources of credit.
Because of their lending activities, people are able to
obtain a higher standard of living through increased
production by the various industries, and increased
investments in capital.

A

Extension of Credit

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38
Q

Commercial banks are equipped with an effective payment system.
✓ when checks are drawn and deposited in the same bank, ____________________
✓ If two banks within the city are involved, _______________
✓ When check are cleared between banks located in different
banks located in different parts of the country, ____________

A
  1. a simpler transfer of funds from one account to another is
    effected.
  2. a direct exchange of checks is done.
  3. the services of a clearing house becomes necessary.
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39
Q

What Functions of Commercial Banks that states: Commercial banks accepts savings from customers.

A

Pooling of Saving

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40
Q

With the use of the pooled funds, commercial banks are able to
extend loans for the following purposes:

A
  1. for business expansion
  2. for the purchase of real estate
  3. for the purpose of consumer goods and services
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41
Q

What Functions of Commercial Banks that states: Commercial banks are very useful institutions in the
financing of foreign trade.

A

Facilities for the financing of foreign trade

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42
Q

When a local buyer wants to make purchases from a seller in a foreign country, he has to reckon with various difficulties like the following:

A
  1. accepting of the buyer’s currency
  2. assurance of payment and shipment of goods
  3. language barriers
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43
Q

What Functions of Commercial Banks that states: Commercial banks also provide trust services to clients.

A

Trust Services

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44
Q

Typical arrangement covered by trust agreements are as follows:

A
  1. the banks acts as the executor of the estate of individuals who
    have wills;
  2. the bank takes the responsibility of investing and managing funds
    entrusted by clients and distributing the proceeds to them;
  3. the bank administers pension and profit-sharing plans of
    companies
  4. the bank acts as trustee in connection with bond issue and as
    transfer agents and registrar for corporations
  5. the bank administers sinking funds of client companies; and
  6. the bank performs other activities associated with the issuance
    and redemption of stocks and bonds.
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45
Q

What Functions of Commercial Banks that states: Individuals with valuables may not have the capability of
keeping such valuables safe and secure. Safekeeping is
one of the oldest services provided by commercial
banks.

A

Safekeeping of Valuables

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46
Q

The protection of valuables may be classified into two
types:

A
  1. safe deposit boxes, and
  2. safekeeping
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47
Q

________ a vault available to customers on a rental basis. The box is where the owner places securities, deeds, insurance policies or personal items that are valuable only to him. Under this arrangement, only the customer is allowed to open the box. Access to the box is controlled by the bank.

A

Safe deposit box

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48
Q

_________arrangement with the bank requires the bank to take custody of the valuables and act as agent for the customer. The function may mean that when a valuable security like bond is placed under the care of the bank.

A

Safekeeping

49
Q

What Functions of Commercial Banks that states: Security brokerage services to their customers through
buying bonds and other securities.

A

Brokerage Services

50
Q

______ is money placed in a bank for safekeeping or to earn interest. It is financial claims held by businesses,
households, and governments against the bank.

A

Deposit

51
Q

What are the Forms of Deposit

A
  1. currency
  2. checks issued by banks
  3. items for collection from banks and other financial
    institutions
  4. proceeds of loans and discounts left on deposit
  5. traveler’s checks
  6. drafts
  7. promissory notes, and
  8. money orders
52
Q

WHAT ARE THE Types of Deposit

A

A. Deposit as to Source
B. Deposit as to the Way They are Created
C. Deposit as to Method of Withdrawal

53
Q

Two types of Deposit as to Source

A
  1. Private deposits
  2. Public deposits
54
Q

________ are those made by private individuals and
businesses.

A

Private deposits

55
Q

_______are those which are made by the government
whether national or local.

A

Public deposits

56
Q

Deposit as to the Way They are Created

A
  1. Direct or primary deposits
  2. Derivative or secondary deposits
57
Q

_________ are so called because they are deposited directly
over-the-counter by the depositors. It come from a. households b. businesses c.
Local/ National Government
* It do not increase money in circulation

A

Direct or primary deposits

58
Q

________ are those created through bank lending and investing.
* They tend to increase money in circulation.

A

Derivative or secondary deposits

59
Q

What are the two types of Deposit as to Method of Withdrawal

A
  1. Checkable deposits
  2. Nontransaction deposits
60
Q

_____are accounts that allow the deposit holder to write checks or to execute other orders
* These accounts are also called demand deposits because they are withdrawable on demand.
* They are also called current accounts because simultaneous deposits and withdrawals can be made on the account.

A

Checkable deposits

61
Q

________are those that cannot be withdrawn on demand or by checks, but interest rates are usually higher than those checkable deposits.

A

Nontransaction deposits

62
Q

Two types of Nontransaction deposits:

A
  1. savings deposits
  2. time deposits
63
Q

COMMERCIAL BANK LOANS CAN BE CLASSIFIED:

A
  1. According to purpose
  2. According to security required
  3. According to maturity
  4. According to method of repayment
  5. According to Origin
64
Q

What are he various types of commercial bank loans
➢ According to purpose:

A
  1. real estate loans
  2. financial institution loans
  3. agricultural loans
  4. commercial and industrial loans
  5. loans to individuals
  6. miscellaneous loans
65
Q

The various types of commercial bank loans according to security required:

A
  1. Secured
  2. Unsecured
66
Q

________backed by collateral (inventories, receivables, equipment,or real estate)

A

Secured

67
Q

_________not backed by collateral and are granted
based on borrower’s integrity, financial condition, expected income and past record of repayment

A

Unsecured

68
Q

The various types of commercial bank loans
➢ According to Maturity:

A
  1. short-term
  2. medium-term
  3. long-term
69
Q

______ loans with maturities one year or less

A

Short-term

70
Q

______ loans with one year to eight years

A

Medium-term

71
Q

______ loans longer than eight years

A

Long-term

72
Q

The various types of commercial bank loans according to Method of Repayment:

A
  1. payment in one lumpsum or straight loan
  2. payment on installment basis
73
Q

_______for repayment of the entire principal on maturity
date. Interest payments may be made in advance or at
maturity of the loan.

A

Straight loans

74
Q

_______are those that require periodic payments of
principal, which may be made in advance or maturity of the
loan.

A

Installment loans

75
Q

The various types of commercial bank loans according to Origin:

A
  1. directly from borrower
  2. by the purchase of notes from dealers of motor cars and
    appliances
  3. by participating in loans originated by other banks
  4. by purchasing notes from commercial paper dealers
76
Q

True or False: The organization and structure of commercial banks are made in accordance with pertinent laws on banking and the specific requirements of the various financial services offered.

A

True

77
Q

Commercial banks are subject to the following requirements:

A
  1. they must be organized in the form of stock corporations
  2. they are required to secure a certificate of authority from the
    Monetary Board;
  3. they are required to register with the Securities and Exchange
    Commission.
  4. at least seventy percent (70%) of the voting stock shall be owned by
    Filipino citizens.
78
Q

Commercial banks are vested by law with powers, in addition to the general powers incident to corporations, as follows:

A
  1. to accept drafts and issue letters of credit
  2. to discount and negotiate promissory notes, drafts, bills of exchange, and other evidences of debts
  3. to receive deposits
  4. to buy and sell foreign exchange and gold or silver bullion
  5. to lend money against personal security against securities consisting of personal property or mortgages on improves real estate and the insured improvements thereon
  6. to acquire readily marketable bond and other debt securities
  7. to invest in equities of allied undertaking like warehousing companies, leasing companies, storage companies, safe deposit box companies,and companies engaged in the management of mutual funds and others
  8. to exercise the powers of an Investment House when authorized bu the Monetary Board.
79
Q

______are depository intermediaries that sell secondary securities in the form of time and savings deposits and invest principally in residential mortgage and consumer loans

A

Thrift Banks

80
Q

THRIFT BANKS consist of the following types

A
  1. Savings and Mortgage banks
  2. Private development banks
  3. Stock savings and loan associations
  4. Microfinance thrift banks
81
Q

_____may be defined as” thrift institutions that derive most of their funds from setting savings deposits to the public and invest most of their incoming funds in mortgages,
corporate bonds, and consumer loans.
✓“ a bank where investors can deposit small
sums of money and receive interest in it”.

A

Savings banks

82
Q

__________ is any corporation organized for the purpose of accumulating the savings of depositors and investing them together with its capital

A

Savings and mortgage bank

83
Q

True or False: Previously, savings banks were only allowed to
handle savings deposits and residentail
mortgage loans.
* Later, they were allowed to expand their
services into non-traditional lines.

A

True

84
Q

_______ are designed to support the policy of the government in
promoting and expanding the economy, expanding industrial
and agricultural growth, supplying the needs for capital and
meeting the demands for adequte investment credit or
medium and long term loans for entrepreneurs.
* a financial institution whose lending policy is guided, in part or
in total, by perceived economic, social, or political needs of a
country rather than by a commercial goals alone.
* lends almost exclusively to private businesses, and in general,
make intermediate to long-term loans

A

Private Development bank

85
Q

TRUE OR FALSE: Private Development Bank also exercise the power of savings bank. The only difference will be based on the
capability of each to offer as many services
they can. Priorities will also make them different in
terms of deposit accomodation and loan
exposure.

A

TRUE

86
Q

__________ is one devoted to extending small loans, referred to as micro loans, to individuals, businesses, and organizations.

A

Micro finance Thrift bank

87
Q

_______ are established to provide credit and and
savings facilities in a fair manner to the
consuming public, industry, commerce, and
agriculture. Thrift institutions that raise most of their funds
by offering savings deposits to the public and
devote most of their assets to home mortgage
and other residential related loans and securities.

A

Stock Savings and Loan Association

88
Q

___________are allowed by law to exercise all the
powers of a savings and mortgage bank,
and with the approval of the Monetary
Board, perform services authorized for
commercial banks.
* services similar to savings banks and
commercial bank

A

Stock Savings and Loan Association

89
Q

__________-according to Ortega “ the economic
vehicle that provides banking services to people who
otherwise would not be able to avail of them and
these people are usually those who live and work in the
countryside”

A

Rural Banking

90
Q

_________it is established and located in a rural area that
provides banking and financial services to residents of
such area.

A

Rural Banking

91
Q

_________ play a pivotal role in promoting inclusive
development especially in the countryside by providing
credit to primary food producers such as farmers,
fisherfolks and small businesses that commonly belong
to the most marginalized sectors of the economy, a top
government official said.

A

Rural banks

92
Q

Organization of Rural Banks

A
  • No Rural Bank shall be operated without a Certificate
    of Authority of the Monetary Board of the Central Bank.
  • Rural Banks shall be organized in the form of stock
    corporations.
  • Rural shall be register with the Securities and Exchange
    Commission
  • The qualifications of the directors and officers of a rural
    bank Shall be prescribed by Monetary Board.
93
Q

Powers and Functions of Rural Banks

A
  • to extend loans or advances for the purpose of meeting the normal credit
    needs of farmers, fishermen or farm families owning or cultivating land
    dedicated to agricultural production as well as normal credit needs of
    cooperatives and merchants
  • to accept savings and time deposits
  • to open current or checking accounts
  • to act as collection agent
  • to act as official depository of municipal, city or provincial funds in the
    municipality, city or province where it is located, subject to such guidelines
    as may be established by the Monetary Board.
  • to rediscount papers with the PNB, LBP, DBP or any banking institutions,
    including its branches and agencies.
  • to offer other services: receive custody funds, documents and valuable
    objects and rent safety deposit boxes, act as financial agent and buy and
    sell, make collections and payments
  • to extend financial assistance to private and public employees
94
Q

As of December 2022, there were about _________rural
bank offices in the Philippines, including
microfinance-oriented banks.

A

3, 303

95
Q

_________are those institutions that offer financial services
but do not operate as banks do (accepts
deposits and grant loans at the same time)
* perform quasi-banking functions, while others do
not.

A

NBFIs - Non-Bank Financial Institutions

96
Q

What is meant by “Non-bank”?

A

The term”non-bank” is one used to mean
a financial institution that either do not make
commercial loans or do not take in deposits.

97
Q

ROLE OF NON-BANK FINANCIAL INSTITUTION

A
  • Banking System cannot fully accomodate the financial
    intermediation requirements of many people.
  • A life insurance company can employ agents to seek
    out potential customers and persuade them to buy life
    insurance policies.
  • The promotional activities of NBFIs are instrumental in
    accumulating funds that are made available for
    lending and investment purposes.
98
Q

TYPES of NBFIs

A
  1. Those with Quasi-Banking Functions
  2. Those without Quasi-Banking
99
Q

Two types of Quasi-Banking Functions

A

a. investment houses
b. financing companies

100
Q

Types of those without Quasi-Banking

A

a. financing companies
b. investment houses
c. securities dealers/brokers
d. lending investors
e. venture capital corporations
f. government NBFIs
h. electronic money issuers
i. remittances agents
j. credit granting entities
k. pawnshops
l. non-stock savings and loan associations
l. credit card companies

101
Q

What is meant by “Quasi-banking”?

A

‘Quasi banking” literally means activities that are almost
those of banking “Quasi-banking function” is defined under the
General Banking Act as to mean borrowing funds for the
borrower’s own account, through the issuance of , endorsement
or acceptance of debt instrument of any kind other than
deposits or through the issuance of participations certificate of
assignments, or similar instruments with recourse, trust certificates or of repurchase agreements from twenty or more lenders at any time for purposesof relending or purchasing of receivables and other obligations”

102
Q

An ________is a financial institution that sells a company’s shares of stock to the general public. The practice is
called underwriting.

A

investment houses

103
Q

What are the Roles of Investment Houses

A

➢ Roles of investment banks include the underwriting of
new stock issues, handling mergers and acquisitions,
and acting as a financial advisor.
➢ Investment banks help corporations obtain debt
financing by finding investors for corporate bonds.
➢ Investment banks guide corporations when going
public, raising capital, and through mergers and
acquisitions.

104
Q

___________are those which are engaged in
making short and intermediate term installment loans
to consumers, factor or finance business receivables,
and finance the sale of business and farm equipment. Funds are rise by issuing stocks and bonds, borrowing from the banks, and selling their commercial paper.

A

Finance companies

105
Q

Financing Companies composed of the following types:

A
  1. Consumer Finance Companies
  2. Sales Finance Companies
  3. Commerical Finance Companies - These are firms that lend
    directly to a wide variety of businesses, mainly of small and
    medium size.
106
Q

These are financing firms devoting most of their resources to small loans granted to individuals and families.

A

Consumer Finance Companies

107
Q

These are financing specializing in
the purchase from retailers of the installment receivables
arising out of retail sales of automobiles, household
appliances, industrial equipment, farm equipment and other
durable goods sold on the installment basis

A

Sales Finance Companies

108
Q

These are firms that lend directly to a wide variety of businesses, mainly of small and medium size.

A

Commercial Finance Companies

109
Q

These are financial institutions that obtain funds from a large number of investors by selling shares.

A

Investment Companies

110
Q

Funds created by investment companies are called ________

A

money market funds.

111
Q

Investment Companies are two types:

A
  1. Open-end investment company
  2. Closed-end investment company
112
Q

_____ also referred to as mutual funds, it is one in which allows it shareholders to surrender shares in any quantity whenever the holder should desire.

A

Open-end investment company

113
Q

________it is an investment company that issues a fixed number of ownership shares, which are traded by investors in the open
market.

A

Closed-end investment company

114
Q

A _________ is a firm that purchases securities and
holds them for a later sale at a profit. The firm accepts
a significant risk in buying securities in anticipation of
profits.

A

security dealer

115
Q

A _______ acts as a go between for buyer and
seller of securities bringing the two groups together so
financial transactions can take place.

A

security broker

116
Q

In return for services rendered, the broker charges a
_________ that reflects the cost of searching the
market for suitable buyers and sellers of securities.

A

commission

117
Q

A __________ is a financial intermediary that pools resources of its
partners and uses the funds to help entrepreneurs start-up new businesses.

A

venture capital corporation

118
Q

A _______ is a person or entity engaged in the business of
lending money or personal property delivered as a security for
loans. May be organized as a single proprietorship,
partnership or corporation. Before commencing business, it must also secure a license from the city or municipality where the pawnshop’s office is located.

A

pawnshop

119
Q

A _________ is a nonbank financial intermediary primarily
engaged in the granting of direct loans to the public.

A

lending investor

2ND SEM-FINALS (8 decks)

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