Chapter 4: Other Financial Institutions Flashcards
Is a firm that provides funding or loans to individuals, enterprises, and other organizations.
Finance Companies
make a profit from the interest rates they charge on their loans, which are normally higher than the interest rates that banks charge their clients.
Finance Companies
It does not receive cash deposits from clients, nor does it provide some other services common to banks, such as checking accounts.
Finance Companies
the fees charged for the use of borrowed money
Interest rates
Regulates the Philippine securities sector, including financing business that issue securities or participate in other regulated activities.
Securities and Exchange Commission (SEC)
a rural bank in the Philippines that provides financing and banking services to rural communities, including loans, deposits, and remittance services.
One Network Bank (ONB)
a lending non-bank financial institutions in the Philippines, primarily known for its pawnshop service which also offers microfinance services.
Cebuana Lhullier Finance Corporation
a financing company that provides consumer and business loans in the Philippines.
Radiowealth Finance Company Inc.
It offers various loan products to meet the diverse financial needs of its clients.
Radiowealth Finance Company Inc.
Functions: (Financing Companies)
- Provide loans with terms and help people afford big expenses.
- Make investments in businesses by providing capital for expansion or new venture.
- Provide assistance and support to help people in making good financial choices.
Benefits: (Financing Companies)
- Individuals and businesses are allowed to acquire assets that can increase efficiency and productivity.
- Borrowers could save on interest costs by obtaining a Loan with cheaper interest rates considering the financial conditions.
Products and Services Offering: (Financing Companies)
- Business Loans
- Consumer Loans
- Mortgage Loans
- Leasing Loans
- Factoring Services
- Investment Products
Challenges in Operations: (Financing Companies)
- Must keep sufficient capital to find lending operations and control possible losses which can be difficult economic crises.
- Interest rate fluctuations can affect financing companies’ profitability and asset-liability management.
Can a financing company lower its interest rate?
Yes
- Assets on the warehouse but cannot be used.
Non Performing Loans
Not easy to dispose (due to processing)
Non Performing Loans
Often known as Credit Unions.
COOPERATIVE
A form of business organization that is owned and run by its members for their mutual advantage.
COOPERATIVE
May offer its members banking and credit services, such as savings accounts, loans, and insurance.
COOPERATIVE
Overseas fostering cooperative growth and ensuring that cooperative groups follow all applicable rules and regulations.
Cooperative Development Authority (CDA)
Functions: (Cooperatives)
- Through money pooling, coop. enables members to earn greater interest rates and gain savings faster.
- Create job opportunities by starting businesses or projects that require workers.
- Protect the rights and interest the members by pricing fairly, advocating for better regulations, and offering legal support when needed.
Benefits: (Cooperatives)
- Members have an equal vote in cooperative decisions, regardless of how much money they have invested.
- Offer members the chance to acquire new skills, gain experience and assume leadership roles within the organization.
Products and Services Offering: (Cooperatives)
- Saving and Credit Facilities
- Cooperative Loans
- Financial Education
- Training
- Insurance and Risk Management Services
Challenges in Operations: (Cooperatives)
- Must maintain financial viability, which calls for efficient resource management, income production, and cost minimization to enable continued —- and expansion.
- It requires excellent leadership and management to make strategic decisions, provide transparency, accountability and represent members.
- Often face challenges in raising funds for investment, development and meeting member’s financial signature.
offers Savings Account & Time Deposits (SA & TD)
Cooperatives
not authorized to offer Current Accounts (CA)
Cooperatives
a microfinance-oriented cooperative in the Philippines that offers financial services, including savings and credit facilities, to micro-entrepreneurs and small business owners.
Alalay sa Kaunlaran, Inc. (ASKI)
a well-established cooperative company in the Philippines, primarily serving the agricultural sector.
1st Valley Credit Cooperative (1VCC)
a cooperative federation in the Philippines composed of thousands of cooperatives across various sectors that provides support to its member-cooperatives.
National Confederation of Cooperatives (NATCCO Network)
Sometimes known as Thrift Institution
SAVINGS AND LOANS ASSOCIATION
Is a financial institution that specializes in accepting savings deposits and providing mortgage loans to individuals and businesses.
SAVINGS AND LOANS ASSOCIATION
Supervises and regulates all banks and non-banks financial institutions in the Philippines, including savings and loan organizations.
Bangko Sentral ng Pilipinas (BSP)
Functions: (S&L Association)
- Extend credit to members for various purposes which helps members access affordable financing to meet their financial needs.
- Help people save money by providing a safe place to deposit their earnings and earn some extra money through interest.
- Supports community projects like building houses and helps small businesses grow which creates jobs.
Benefits: (S&L Association)
- Members can borrow money from at reasonable rates without paying high interest rates fees.
- By depositing money in SLAs, members can earn more investment on their savings compared to regular bank accounts.
- Members have a say on how the SLA operates and can vote on important decisions.
a government-owned and controlled corporation in the Philippines that provides affordable housing loans and other financial services to its members.
Pag-IBIG Fund or Home Development Mutual Fund (HDMF)
a thrift bank owned by the ________________________ catering primarily to government employees and their families.
Government Service Insurance System (GSIS), Family Bank
a thrift bank that provides banking services to retail and corporate clients in the Philippines.
Sterling Bank of Asia
Products and Services Offering: (S&L Association)
- Saving Account
- Mortgage Loans
- Investment Products
- Insurance Products
- Personal Loans
Challenges in Operations: Savings and Loan Associations
- Requires management of various regulatory restrictions set by central banks and cooperative authorities in order to be legally compliant and avoid charges.
- Competition from traditional banks, non-bank financial institutions, and expanding financial tech companies
Affected by macroeconomic variables including inflation and interest rates, requiring risk management techniques and adaptation
