Lesson 1 Flashcards
It refers to the basis of funding for a specific financial
transaction.
Finance
It refers to the use of money and credit in
business.
Business Finance
It deals with decisions that all business
firms formulate concerning cash flows, including both inflows and outflows.
Managerial Finance
It involves employee relations and personnel
decisions, strategic planning, and the overall operations of the
business.
Management
It is the management of money and
other valuables that can easily be converted into cash.
Financial Management
It refers to functions provided by
organizations that deal with the management of money.
Financial Services
It is an entity involved in the business of engaging
with financial and monetary transactions such as deposits, loans, investments, and currency exchange
Financial Institution.
It is a trading floor wherein trading of financial
securities, which include stocks and bonds, and precious metals and
derivatives occur at low transaction costs.
Financial Markets
It refers to the process of financing funds for profit or monetary
gains.
Investment.
It deals with standards and values, with questions of what is right and what is good, what one should to do and not to do, and what is a worthy person or life
Ethics.
It is the study of proper business policies and practices
regarding theoretically controversial subjects, including corporate governance, insider trading, bribery, discrimination, corporate social
responsibility, and fiduciary responsibilities.
Business Ethics.
It is the full disclosure of data and an account of
an organization’s financial condition, performance, ownership and authority, relationship with shareholders and commitment to business ethics and
morals.
Corporate Governance.
is a network of financial
institutions/intermediaries, financial markets,
financial instruments and financial services to
facilitate the transfer of funds.
Financial System
The system also consists of lender-savers, and the
ultimate users of funds such as borrower-spenders.
Financial System
Funds that flow through financial intermediaries. These institutions were pooling saver funds then invest (or lending) those funds through others that need them.
Indirect Finance
Funds that flow directly from lenders to borrowers with the assistance of institutions that provide brokerage services. These borrowers/investors can raise funds directly from lenders in financial markets.
Direct Finance
households
business firms
government
foreginers
lenders-savers and borrower spenders
combines the services of a
commercial bank and an investment bank,
providing all services from within one entity
Universal Banks
is a type of financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses.
Commercial Banks
Top 10 Universal Banks in the Phils.
(based on total assets as of March 2023)
- BDO Unibank – 3.92T
- Land Bank of the Philippines- 3.12T
- Bank of the Philippine Islands- 2.66T
- Metropolitan Bank and Trust Company- 2.62T
- China Banking Corporation – 1.36T
- Rizal Commercial Banking Corporation – 1.19T
- Philippine National Bank – 1.15T
- Development Bank of the Philippines- 975.84B
- Union Bank of the Philippines- 968.65B
- Security Banking Corporation- 873.96B
List of Commercial Banks in the Phils
- Asia United Bank Corp.
- Bangkok Bank Public Co. Ltd.
- Bank of America, N.A.
- Bank of China Ltd. – Manila
- Bank of Commerce
- Bank of Tokyo-Mitsubishi UFJ, Ltd.
- BDO Private Bank, Inc.
- Chinatrust (Phils.) Commercial Bank Corp.
- Citibank, N.A.
10.JP Morgan Chase Bank, N.A.
11.Korea Exchange Bank
12.Maybank Philippines, Inc.
13.Mega International Commercial Bank Co., Ltd.
14.Philippine Bank of Communications
15.Philippine Veterans Bank
16.Robinsons Bank Corp.
focuses on basic banking services
and are usually community-focused institutions,
smaller than retail and commercial banks.
Thrift Banks
under the rules, regulation and
supervision of the BSP, continuously provide credit
and other banking services to farmers, fisher folks
and rural business people to improve the quality of
life in the countryside.
Rural Banks
these are completely
government-owned institutions established mainly
to provide medium and long-term credits to the
industrial, agricultural and real estate sectors of the
economy.
Specialized Gov’t Banks
Top Thrift Banks or Savings Bank in the
Phils. (Based on Total Assets as of March 31, 2023)
1 Philippine Savings Bank (PS Bank) 254.29B
2 Philippine Business Bank 135.63B
3 China Bank Savings 132.68B
4 City Savings 131.92B
5 Bank of Makati 49.75B
6 Sterling Bank 40.18B
7 Producers Savings Bank 31.01B
8 BPI Direct Banko 27.26B
9 First Consolidated 24.85B
10 UCPB Savings 15.92B
Top 10 Rural Banks in the Phils.
(As of March 31, 2023)
1 BDO Network Bank 91.72B
2 East West Rural Bank 29.14B
3 Card Bank 23.35B
4 Seabank Philippines 13.28B
5 Guagua Rural Bank 7.76B
6 Cebuana Lhuillier 6.53B
7 Card MRI Rizal Bank 6.28B
8 Agribusiness Rural Bank 4.94B
9 BOF Inc. Rural Bank 4.80B
10 FicoBank 4.68B
What are the specialized Government Banks
- Lank Bank of the Philippines
- Development Bank of the Philippines
- Al Amanah Islamic Investment Bank of the Phils.
was created as a government bank
in 1916, but it started getting privatized in 1989 when its stocks were listed in the stock exchange.
Philippine National Bank (PNB)
In 1996,_____________ became a private bank when the government’s ownership
was reduced to 46%
Philippine National Bank (PNB)
In 1999, a group led by _________ acquired 35% of the bank and increased its ownership to 69.32% in 2000. It further increased its ownership to 77.43% in 2005.
Lucio Tan
In ______, the government sold all its remaining shares in PNB to the public.
2007
Financial Intermediaries “Non-Banks”
Investment Houses
Financing Companies
Securities Dealers/Brokers Investment Companies
Lending Investor
Pawnshops
Gov’t Non-Bank FI
Venture Capital Corporations
Mutual Building & Loan Assn
Non-stock Savings & Loans
is a financial institution that does not have a full banking license and cannot accept deposits from the public.
non-bank financial institution (NBFI)
Forms of Business Organizations
Sole proprietorship
Partnership
Corporation
is the simplest business form
and is not a legal entity. It simply refers to a person
who owns the business and is personally responsible
for its debts.
Sole proprietorship
is defined as the relation between
persons who have agreed to share the profits of a
business carried on by all or any of them acting for all.
Partnership
is a legal entity that is separate and
distinct from its owners. It enjoy most of the rights
and responsibilities that individuals possess: they can
enter contracts, loan and borrow money, sue and be
sued, hire employees, own assets, and pay taxes.
Corporation
Sole Proprietorship Advantages
Advantages
Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as
personal income
Sole Proprietorship Disadvantages
Disadvantages
Limited to life of owner
Equity capital limited to owner’s personal wealth
Unlimited liability
Difficult to sell ownership interest
Partnership Advantages
Advantages
Two or more owners
More capital available
Relatively easy to start
Income taxed once as personal income
Partnership Disadvantages
Disadvantages
Partnership dissolves when one partner dies or wishes to sell
Difficult to transfer ownership
Unlimited liability
- General partnership
- Limited partnership
is a business arrangement by which two or more individuals agree to share in all assets, profits,
financial and legal liabilities of a jointly- owned business structure. In fact, any partner may
be sued for the entirety of a partnership’s business
debts.
general partnership
is a form of partnership in which some of the partners
contribute only financially and are liable only to the extent of the amount of money that they have invested. In a__________- structure, limited partners are shielded to the extent of their investment.
limited
partnership
Corporation Advantages
Advantages
Limited liability
Unlimited life
Separation of ownership and management
Transfer of ownership is easy
Easier to raise capital
Corporation disadvantages
Disadvantages
Separation of ownership and management
Double taxation (income taxed at the corporate rate and then dividends taxed at personal rate)
examines the rational justification for our moral
judgments; it studies what is morally right or wrong, just or unjust.
Ethics
reflects on human beings and their interaction with nature and with other humans, on freedom, on
responsibility and on justice.
Ethics
is the study of appropriate business policies and
practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities
Business ethics
Twelve(12) Principles of Business Ethics
Honesty
Integrity
Keeping your promises
Loyalty
Fairness
Caring
Respect
Obeying the Law
Excellence
Being a Leader
Morale
Accountability
is the system of rules, practices, and processes by
which a firm is directed and controlled (an art).
corporate governance
essentially involves balancing the interests of a
company’s many stakeholders.
corporate governance
Theories Governing Corporate Governance
- Agency theory
- Stewardship theory
is a principle that is used to explain
and resolve issues in the relationship between business principals and their agents.
Agency theory
Three conditions to operate relationship (agency theory)
- The agent has the freedom to choose between various course of actions
- Actions of agent influence their own growth as well as the principals
- Difficult for the principal to observe the actions of the
agent as information is not enough
Facts of Agency Theory
- The supplier of finance needs a return on their investment
- Principal needs assurance that agent does not steal the investment
- Principal needs to control the agent
Problems with agency theory
- Utility maximizer (agent will not act in the best interest of the principal
- Unequal sharing of information
- Element of risk (judge performance based on annual reports )
is a theory that managers, left on their own, will act as responsible stewards of the assets they control.
Stewardship theory
- Assumes that managers are basically trustworthy and attach significant value to their own personal reputations.
Stewardship theory
- Built on premise that directors will fulfill their duties
towards the shareholders.
Stewardship theory
- Assumes that humans are good and directors are
trustworthy.
Stewardship theory
Urban Bank President Commits _______-
Suicide
may include environmental
concerns, where a company believes it should
operate with as little impact as possible on the earth.
Stewardship models
Customers also like to feel like they’re part of
something, and may stay with a stewardship-driven
business even if its price for goods or services is
higher.
Effects On Clients
A solid sense of stewardship improves company
morale when the workers feel they’re part of
something bigger.
Effects On Employees
you do it because it’s enjoyable and interesting.
Intrinsic Motivation
you do it because of an outside incentive or
pressure to do it, such as a reward (reward-driven behavior) or deadline.
Extrinsic Motivation
2 types of motivation
Intrinsic Motivation
Extrinsic Motivation
2 tpes of effects
Effects On Clients
Effects On Employees
