1 / 9

Chapter 2: Financial Institutions

Chapter 2: Financial Institutions. What Do Financial Mkts. & Institutions Do?. Financial Intermediation Benefits of Intermediation Denominational Divisibility Maturity Flexibility Credit Risk Diversification Liquidity Kinds of Financial Institutions

richard_edik
Download Presentation

Chapter 2: Financial Institutions

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 2: Financial Institutions • What Do Financial Mkts. & Institutions Do?

  2. Financial Intermediation • Benefits of Intermediation • Denominational Divisibility • Maturity Flexibility • Credit Risk Diversification • Liquidity • Kinds of Financial Institutions • Deposit Type Institutions: Issue Insured Deposits & Make Loans • Commercial Banks (8,500) • Savings & Loans or Savings Banks (Thrifts) – 1,600 • Credit Unions – 12,000

  3. Contractual Savings Institutions • Life Insurance Cos. • Casualty Insurance Cos. • Pension Funds • Other Types of Financial Institutions • Finance Cos. • Mutual Funds • Net Asset Value (NAV) • Open-ended • Close-ended (exchange traded) • Exchange Traded Funds (ETFs) • Spiders, Diamonds, Vipers, Oh My!

  4. Mutual Fund Quote:

  5. Exchange Traded Funds

  6. Risks Faced by Financial Institutions • Credit Risk • Interest Rate Risk • Liquidity Risk • Foreign Exchange Risk • Political Risk • Financial Institutions Make Money on the Spread & by Charging Fees for Service.

  7. Recent Trends in Financial Institutions

  8. Data on Financial Institutions • http://www.federalreserve.gov/ • http://www.fdic.gov/ • http://www.cuna.org/ • http://www.morningstar.com/ • http://www.vanguard.com/ • Homework: Find a the balance sheet & income statement for a financial institution.

  9. Key Ratios • NIM = (Int. Inc. – Int. Exp)/Totl. Assets • ROA = Net Inc./ Totl. Assets • ROE = Net Inc./ Equity • ROE = NI/Rev. * Rev./TA * TA/EQ • Rev. = Int. Inc. + Other Inc.

More Related