(Dis)advantages Financial Instituiton Flashcards
1
Q
Bank of England +ve
A
- Responsible for protecting the financial stability of the economy as a whole.
- Sets interest rates at a level designed to help achieve a stable economy
- Lends to banks
2
Q
Bank of England -ve
A
- Not a bank for members of the general public
- Can raise interest rates making borrowing more expensive
3
Q
Bank of England definition
A
4
Q
Banks +ve
A
- Offer a range of services and account types
- Provide a secure place to store money
- Pay interest on credit balances on most types of accounts
5
Q
Banks -ve
A
- Savings are only protected up the value of £85,000, so if a bank goes bankrupt savings above this would be lost
- Profit-making organisations owned by shareholders, therefore costs to individuals may be higher than necessary in order to fulfil shareholder objectives
6
Q
Banks definition
A
7
Q
Building societies +ve
A
- Offer a range of services and account types
- Provide a secure place to store money
- Pay interest on credit balances on most types of accounts
- Owned by members and therefore costs can be kept down allowing for higher interest payments
8
Q
Building societies -ve
A
- Savings are only protected up to the value of £85,000 so if a building society goes bankrupt savings above this would be lost
- May lack the business drive of a commercial bank
9
Q
Building societies definition
A
10
Q
Credit Unions +ve
A
- Offer a range of services and account types
- Provide a secure place to store money
- Owned by members and therefore costs can be kept down allowing for higher interest payments
- Often offer additional benefits to the community or a good cause.
11
Q
Credit Unions -ve
A
- Savings are only protected up to the value of £85,000, so if a credit union goes bankrupt savings above this would be lost
- May lack the business drive of a commercial bank
12
Q
Credit Unions definition
A
13
Q
National Savings and Investment +ve
A
- Government-backed, therefore offering security on 100% of savings with no upper limit
- Offers additional services/methods of savings e.g premium bonds.
14
Q
National Savings and investment -ve
A
- Rates are variable
- Not as easy to access due to lack of a high presence
- Often required to give notice on withdrawals
15
Q
National Savings and Investment definition
A
16
Q
Insurance companies +ve
A
- Protect aginast unexpected losses or financial expenses
- Easy and regular monthly payments make planning easy
- Wide range of services and levels of cover to suit the needs of individuals
17
Q
Insurance companies -ve
A
- Premiums are assessed on the estimated degree of risk which may be seen to penalise some members or groups of society too harshly
- Profit-making organisations therefore premiums will be charged to ensure shareholder needs are met.
18
Q
Insurance companies definitions
A
19
Q
Pensions companies +ve
A
- Proveds a structure to help plan for financial security after retirement
20
Q
Pensions companies -ve
A
Poor investment decision bys the pension company may result in a disappointing turn
