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Understanding the Philippine Financial Environment:
Markets and Institutions
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Philippine Financial System
Financial System
On a regional scale, the financial system is the system that enables lenders
and borrowers to exchange funds.
It is (within the scope of finance) a system that allows the exchange of funds
between lenders, investors, and borrowers.
It is made of intricate and complex models that portray financial services,
institutions and markets that link depositors with investors.
It is the set of implemented procedures that track the financial activities of the
company.
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Philippine Financial System
Financial System
The term Financial System is comprised of two words- Finance and System.
Finance means monetary resources comprising ownership funds and debts.
System indicates a set of interrelated parts working together to achieve some
purpose.
The financial system of an economy exists to organize the settlement of
payments, to raise and allocate finance, and to manage the risks associated
with financing and exchange.
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Philippine Financial System
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Philippine Financial System
Components of
Financial System
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Philippine Financial System
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Philippine Financial System
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Philippine Financial System
The BSP is the Philippines central monetary authority that provides policy
directions in the areas of money, banking and credit.
The BSPs powers and functions are exercised by its Monetary Board,
consisting of seven members appointed by the president of the Philippines.
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Philippine Financial System
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Philippine Financial System
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Bangko Sentral ng Pilipinas and the Banking
Institutions and Non-Bank Financial Institutions
NON-BANK FINANCIAL
BANKING INSTITUTIONS
INSTITUTIONS
Private
Development
Banks
Savings &
Loan
Association
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Bangko Sentral ng Pilipinas and the Banking
Institutions and Non-Bank Financial Institutions
NON-BANK FINANCIAL
INSTITUTIONS
Pawnshops
Lending Investors
Fund Managers
Trust Companies/Departments
Insurance Companies
Etc.
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Philippine Financial System
Banking Institutions
Private Banking Institutions
Commercial Bank is a financial institution that provides various financial
service, such as accepting deposits and issuing loans.
Ordinary Commercial Banks these are banks which perform all kinds of
banking functions such as accepting deposits, advancing loans, credit
creation, and agency functions.
Universal Banks may offer credit, loans, deposits, asset management,
investment advisory, payment processing, securities transactions,
underwriting and financial analysis.
Thrift Banks - are engaged in accumulating savings of depositors and
investing them.
Savings & Mortgage Bank - a bank that primarily or exclusively offers
loans to clients to purchase real estate, especially of private residences.
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Philippine Financial System
Banking Institutions
Private Development Bank dedicated to fund new and upcoming businesses and
economic development projects by providing equity capital and/or loan capital.
Savings & Loan Association is a financial institution that specializes in savings
deposits and mortgage loan.
Rural Banks are the more popular type of banks in the rural communities.
Government Banking Institutions
Development Bank of the Philippines - provides various banking products and services
to the agricultural and industrial enterprises.
Land Bank of the Philippines - is a government financial institution that strikes a
balance in fulfilling its social mandate of promoting countryside development while
remaining financially viable.
Philippine Amanah Bank - providing, among others, reasonable medium and long-term
credit facilities to the people of the Muslim-dominated provinces of Cotabato, South
Cotabato, Lanao del Sur, Lanao del Norte, Sulu, Basilan, Zamboanga del Norte,
Zamboanga del Sur and Palawan.
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Philippine Financial System
Non-banking Institutions
Private Non-bank Financial Institutions
Investment Banks is a financial intermediary that performs a variety of
services for businesses and some governments.
Finance Companies is a specialized financial institution that supplies credit
for the purchase of consumer goods and services by purchasing the time-
sales contracts of merchants or by granting small loans directly to consumers.
Securities Dealers/Brokers is a person or firm in the business of buying and
selling securities, operating as both a broker and a dealer, depending on the
transaction.
Pawnshops offers secured loans to people, with items of personal property
used as collateral.
Lending Investors actively looks for individuals with excess capital to invest.
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Philippine Financial System
Non-banking Institutions
Fund Managers - is responsible for implementing a fund's investing
strategy and managing its portfolio trading activities.
Trust Companies/Departments - is a legal entity that acts as a fiduciary,
agent or trustee on behalf of a person or business entity for the purpose of
administration, management and the eventual transfer of assets to a
beneficial party.
Insurance Companies - provides coverage, in the form of compensation
resulting from loss, damages, injury, treatment or hardship in exchange for
premium payments.
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Philippine Financial System
Non-banking Institutions
Government Non-bank Financial Institutions
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Understanding the Philippine Financial Environment:
Markets and Institutions
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Sectors and Stakeholders
The financial sector is a category of stocks containing firms that provide financial
services to commercial and retail customers. This sector includes banks, investment
funds, insurance companies and real estate. Financial services perform best in low
interest rate environments. A large portion of this sector generates revenue from
mortgages and loans, which gain value as interest rates drop.
The formal financial sector includes banking institutions that are authorized to provide
credit and accept deposits from the general public. Non-bank institutions are also part of
the formal financial sub-system. These non-bank institutions are authorized to provide
credit but are not allowed to accept deposits from the public.
The informal financial sector is composed of a variety of organized and singular sources
of credit
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Sectors and Stakeholders
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Sectors and Stakeholders
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Sectors and Stakeholders
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Understanding the Philippine Financial Environment:
Markets and Institutions
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Philippine Financial Markets and Institutions
1.The mechanism that facilitate the parking of surplus money of individuals, firms
and investment bankers to earn return.
2.Organizations that facilitate the trade in financial products i.e. Stock exchanges
facilitate the trade in stocks, bonds and warrants.
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Philippine Financial Markets and Institutions
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Philippine Financial Markets and Institutions
1.Money markets, which provide short term debt financing and investment
2.The capital markets consist of primary markets and secondary markets. Newly formed
(issued) securities are bought or sold in primary markets. Secondary markets allow
investors to sell securities that they hold or buy the existing securities
4.Derivatives markets, which provide instruments for the management of financial risk.
5.Future markets, which provide standardized forward contracts for trading products at
some future date.
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Philippine Financial Markets and Institutions
The financial markets are broadly and commonly divided into two types:
1. Money Market
2. Capital Market
Money Market
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Philippine Financial Markets and Institutions
To provide a platform for the central bank of the country to control and manage
the money supply and the liquidity in the economy.
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Philippine Financial Markets and Institutions
Participants who enters into the transactions in the money market are:
1.Central Government
2.State Government
3.Public Sector Undertakings
4.Scheduled Commercial Banks
5.Private Sector Companies
6.Provident Funds
7.Life Insurance Companies
8.General Insurance Companies
9.Mutual Funds
10.Non-banking Financial Companies
11.Primary Dealers
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Philippine Financial Markets and Institutions
Participants who enters into the transactions in the money market are:
1.Central Government
2.State Government
3.Public Sector Undertakings
4.Scheduled Commercial Banks
5.Private Sector Companies
6.Provident Funds
7.Life Insurance Companies
8.General Insurance Companies
9.Mutual Funds
10.Non-banking Financial Companies
11.Primary Dealers
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Philippine Financial Markets and Institutions
Capital Market
the term capital market refers to the institutional arrangements for facilitating the
borrowing and lending of long-term funds.
a capital market may be defined as an organized mechanism for effective and
efficient transfer of money or financial resources from the investing parties, i.e.
individuals or institutional savers to the entrepreneurs engaged in industry or
commerce and that would either be in the private or public sectors of an
economy.
all the long term capital needs are met by the capital market.
capital market is a central coordinating and directing mechanism for free and
balanced flow of financial resources into the economic system operating in a
country.
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Philippine Financial Markets and Institutions
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Philippine Financial Markets and Institutions
2.Bond markets, which provide financing through the issuance of Bonds, and
enable the subsequent trading thereof.
3.Derivative market where derivative products like stock futures, index futures
and options are traded. Financial derivative is an agreement between two parties
for buying or selling an underlying asset (Stock or index) whose value is derived
from the underlying financial assets or claim.
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Philippine Financial Markets and Institutions
1.Primary market is the market where initial issues are sold and bought. When a
company issues shares for the first time, it is trade through primary market. The
primary market is facilitated by the intermediaries like issue managers, issuing
banks, registrars, book-runners etc. who intermediate between investors and
issuers.
2.The secondary market consists of stock exchanges and over the counter
exchanges. In the secondary market the previously issued securities are sold and
bought and it passes from one investor to another. Stock brokers play an
important role as the intermediaries between stock exchanges and the investors.
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Philippine Financial Markets and Institutions
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Philippine Financial Markets and Institutions
Commercial Banks
- commercial banks accept deposits and provide security and convenience
to their customers.
- commercial banks also make loans that individuals and businesses use to
buy goods or expand business operations, which in turn lead to more deposited funds
that make their way to banks.
Investment Banks
- an investment bank is a financial intermediary that performs a variety of
services for businesses and some governments. These services include underwriting
debt and equity offerings, acting as an intermediary between an issuer of securities
and the investing public, making markets, facilitating mergers and other corporate
reorganizations, and acting as a broker for institutional clients.
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Philippine Financial Markets and Institutions
Brokerages
- a brokerage acts as an intermediary between buyers and sellers to
facilitate securities transactions. Brokerage companies are compensated via
commission after the transaction has been successfully completed.
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Philippine Financial Markets and Institutions
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Philippine Financial Markets and Institutions
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Philippine Financial Markets and Institutions
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Philippine Financial Markets and Institutions
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Philippine Financial Markets and Institutions
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Philippine Financial Markets and Institutions
Fixed Income
- fixed income investments represent loans that investors extend to corporations or
government bodies.
Bankruptcy
- when a company falls into bankruptcy, it may mean that both equity and fixed income
investments are lost.
Consideration
- equities and fixed income investments respond differently to financial conditions. As a
result, these two investment categories are considered non-correlated to one another.
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Understanding the Philippine Financial Environment:
Markets and Institutions
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Understanding the Philippine Financial Environment:
Markets and Institutions
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Understanding the Philippine Financial Environment:
Markets and Institutions
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Policies, Problems, Concerns and How to
Address Them
Introduction
A financial system allows the exchange of funds between
lenders, investors, and borrowers.
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
Issues Arising:
Financial Stability
Integrated Regulator (s)
Financial Transparency
Deregulation of Financial Market
Rapid Financial Innovation
Space Age Technology
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Addressing Problems in the Philippine Financial System
Focus of reforms:
I. promoting savings generation at the regional level but
institutionalizing deployment of resources at the national level
II. developing an enabling environment for long-term savings
III. strengthening the governance framework of the financial system
in line with international standards and best practices
IV. establishing a strong legal framework for financial sector
development
V. strengthening capital market development planning
VI. improving market functions
VII. Strengthening overall supervision and regulation
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Policies, Problems, Concerns and How to
Address Them
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Policies, Problems, Concerns and How to
Address Them
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Thank You!
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