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PSU-FIN 271 - Money and Banking 1 - 2021S - Lecture Slides - 12

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Trần Ngọc Quang Vinh
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45 views17 pages

PSU-FIN 271 - Money and Banking 1 - 2021S - Lecture Slides - 12

Uploaded by

Trần Ngọc Quang Vinh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PSU-FIN 271

Money and Banking 1

Chapter 7 – Financial Industry


Structure
2 hours
M. Fin. Dang Le Vu
Email: [email protected]
Learning Objectives

1. To understand the changing structure of the financial


industry, we will discuss the services provided by both
depository and nondepository financial institutions.

2. To study the functions and characteristics of financial


institutions
Outline

7.1 Depository Institutions

7.2 Nondepository Institutions


Financial Industry Structure
Pension Funds

Commercial Bank

Depository Nondepository Insurance Companies


Institutions Institutions

Saving and loan


associations
Securities Firms

Credit Union Finance Companies


Financial Industry Structure in
Vietnam
Nondepository Institutions
Five categories of nondepository
institutions
● Insurance companies;
● Pension funds;
● Securities firms;
● Finance companies, and
● Government-sponsored enterprises.
Insurance companies

• At the most basic level, all insurance


companies accept premiums from
policyholders in exchange for the promise of
compensation if certain events occur.
• For the individual policy holder, insurance is
a way to transfer risk.
Role of Insurance companies

• https://www.youtube.com/watch?
v=7vlhJAdS0dM
Two Types of Insurance

Insurance companies offer two types of insurance:


• Life insurance.

• Property and casualty insurance.


Pension Funds
• A pension fund offers people the ability to make
premium payments today in exchange for
promised payments under certain future
circumstances.
• They provide an easy way to make sure that a
worker saves and has sufficient resources in old
age.
• They help savers to diversify their risk.
Finance Companies

• Finance companies are in the lending business.


• They raise funds directly in the financial
markets by issuing commercial paper and
securities and then use them to make loans to
individuals and corporations.
Finance Companies

Most finance companies specialize in one of three


loan types:
- Consumer loans,
- Business loans, and
- Sales loans
Securities Firms

The broad class of securities firms includes:


• Brokerages,
• Investment banks, and
• Mutual fund companies.
In one way or another, these are all financial
intermediaries.
Key Terms
1. Depository Institutions
2. Nondepository Institutions
3. Insurance Companies
4. Pension Funds
5. Finance Companies
6. Securities Firms
Quiz
________are financial intermediaries that accept deposits from
individuals and institutions and make loan.
a. Depository institutions
b. Nondepository institutions
c. Financial intermediaries
d. All of the above
Quiz
Commercial Bank, Savings and loan associations,Credit unions
are examples of:
a. Depository institutions
b. Nondepository institutions
c. Financial institutions
d. Financial intermediaries
Quiz
Which of the following is not a nondepository institution?
a. credit unions.
b. securities firms.
c. pension funds.
d. government–sponsored enterprises.

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