The Functions Of Financial Institutions Within A Financial System

The banking industry has over the years evolved from simple to large and complex organization. They have grown from one street building into having multiple branches some of which are international. Their clients range from individual and institutions to governments and other banks. Banks do not manufacture physical things. Their work is simply services for money (Koch & MacDonald 2010). Such services include storing, lending and managing money. All people and institutions, as well as governments, need money to operate accordingly.

Banks are institutions in which people put their money for safekeeping, to save, to use to pay their bills, or to earn interest on. Banks are allowed to use that money to make loans and earn interest for the bank's’ owners. Different types of banks offer different types of services. For example, commercial banks originally just served businesses, and savings banks and credit unions were used by individuals, especially those who couldn’t qualify for loans at regular banks. This is no longer the case. Although commercial banks and thrift institutions used to serve different purposes, today they all offer many of the same types of services including bank accounts, loans, credit, certificates of deposits (CDs), and much more.

This research essay is done for the purpose to compare and contrast the financial system between two countries chosen which are Australia and Singapore. This research essay is mainly concentrate on different types of institutions in the financial system and the role they play. Moreover, the different types of institutions in different countries will then compare in order to analyze the similarity and differences.

First, an overview of the Twentieth Century American Banking System. Banking regulations are implanted to strengthen the banking sector and to eliminate bank panics. For example, the creation of the Federal Reserve System in 1913 was largely a response to lessons learned in the Panic of 1907. Industry regulation and structure, risk management viz. moral hazard, adverse selection.

1. Describe the different kinds of financial institutions that make up the US financial system.

Lending institutions have been around since the late 1700’s. Banks are establishments that are authorized by the government to accept deposits, pay interest on deposits, clear checks, make loans, act as an intermediary in financial transactions and provide other financial services to customers.

Bank regulations are based on a general core of principles. Banks have two important economic functions. First, they operate a payments system, in which a modern

Banks can be described as a financial institution where deposits are accepted and credited from the public. There are very essential in the financial systems as it influences the economy of a country. Most of the countries follow a system which is known as fractional reserve form of banking. Under this policy banks holds liquid assets which is equal to only a part of your current liabilities. These institutions are subjected to minimum capital standard which is called Basel Accords. Banks are specific place which will ensure that your finances are secured.

Financial institutions are regulated because they provide products and services that the economy needs to function efficiently. Also they function in an environment where there is a great deal of asymmetric information, so they help in the screening process. Another reason why banks are regulated is to limit predatory lending practices, for example charging excessively high interest rates or imposing unreasonable conditions and penalties. A final reason why financial

The banking industry has transformed in numerous ways through the ages. Financial institutions now offer a broader assortment of products and services than ever before. The banking industry’s principal purpose remains the same. Financial institutions put the public 's excess monies (deposits and investments) to work by loaning them to individuals to purchase dwellings and automobiles, to open and grow businesses, college funds for families with children, and for countless other reasons. Banks are essential to the wellbeing of our country 's economy. For millions of people residing in the United States, financial institutions are the primary election for saving, borrowing, and investing funds.

The banking sector is the division of society’s economy, which is devoted to managing financial assets for its people. The industry invests on the finances, leveraging them to produce more wealth as it follows the regulation of the government. The holding of people’s financial assets is done as per customers’ wish and request. It all starts with a simple account opening, which in turn involves giving full individual information including their dates of birth, full names, next of kin, national document registration numbers, residence, gender, nationality, and so on. The bank vows to keep this information secure, and the

The American financial industry is a very active industry in the world. Although the history for American financial industry is shorter than other old capitalist counties, such as English, France , Netherland, due to the industry ‘s potentiality, creativity and successful supervision comes from government ,the American financial industry has been growing fast since it was established hundreds year ago. Overall ,at present ,from the aspects of industry scale and structure ,monetary policy and the freedom of transaction ,those are more mature and perfect than any other countries, as al result ,the US financial industry has become the world 's most advanced financial industry .

Presence of banking services and products aims to provide a critical tool to inculcate the savings habit. It also creates avenues of formal credit to the unbanked population who are otherwise dependent on informal channels of credit like family, friends and moneylenders.

Financial institutions provide different kind of services. Depository institutions like banks, savings, loans and credit unions transform liquid liabilities like checking accounts, current accounts, and certificates of deposit that can be cashed in prior to maturity into relatively illiquid assets, such as home mortgages, house loans, loans to finance business inventories and accounts receivable, and credit card balances. These institutions also operate the payments system where bank balances are shifted between the set parties through checks, wire transfers, and credit and debit card transactions. INSURANCE companies fall into two broad categories which are life and health insurers, whose policies provide financial protection against different conditions like death, disability, and medical bills and property and casualty insurers, whose policies protect policyholders against losses arising from certain accidents like fire, natural disasters, accidents, fraud, and other calamities. Financial institutions which are having fixed-amount creditors include institutes with respect to banks, credit unions, insurance companies which are life or instrument, stockbrokers, and money-market mutual funds (MMMF).

Deposits are backbone to bank as it is to the body of man. It is the lifeblood of a bank. The deposit of a bank is useful in many ways. The total deposits of MCB are growing since its inauguration but after privatization there is a sharp incline in over all deposits of the bank. The