电子科技大学：《金融学基础》（英文版）Chapter 2: The Financial System

Finance School of management Chapter 2: The Financial System Objective Understanding the workings of the financial system Determining rates of retur uesTc

1 Finance School of Management Chapter 2: The Financial System Objective •Understanding the workings of the financial system •Determining rates of return

Finance School of management Chapter 2 Contents What is a financial Financial market Rates System Financial Intermediaries The flow of funds Financial Infrastructure The functional and regulation Perspective Governmental quasi Financial Innovation Goⅴ ernmental he“ Invisible hand” Organizations Financial markets uesTc

2 Finance School of Management Chapter 2 Contents ❖ What is a Financial System ❖ The Flow of Funds ❖ The Functional Perspective ❖ Financial Innovation & the “Invisible Hand” ❖ Financial Markets ❖ Financial Market Rates ❖ Financial Intermediaries ❖ Financial Infrastructure and Regulation ❖ Governmental & Quasi￾Governmental Organizations

Finance School of management What is the Financial System? The financial system encompasses markets Intermediaries other institutions used to carry out the financial decisions of households business firms. and governments uesTc

3 Finance School of Management What is the Financial System? ❖ The financial system encompasses – markets – Intermediaries – other institutions used to carry out the financial decisions of households, business firms, and governments

Finance School of management What is the Financial System Exchanges over-the-counter(OTC, off-exchange) markets Financial intermediaries providing financial services and products banks, investment companies, and insurance companies checking accounts, commercial loans, mortgages, mutual funds, insurance contracts and many other contracts financial markets and intermediaries are linked through networks and global in scope governed by the regulatory institutions uesTc

4 Finance School of Management ❖ Exchanges & over-the-counter (OTC, off-exchange) markets ❖ Financial intermediaries – providing financial services and products – banks, investment companies, and insurance companies – checking accounts, commercial loans, mortgages, mutual funds, insurance contracts and many other contracts ❖ Financial markets and intermediaries are – linked through networks and global in scope – governed by the regulatory institutions What is the Financial System?

Finance School of management The flow of funds Markets Surplus Units Deficit Units Intermediaries uesTc

5 Finance School of Management The Flow of Funds Markets Intermediaries Surplus Units Deficit Units

Finance School of management Fund flows via market Dividend reinvestment plans Markets a household buys shares Surplus Units of stocks frem a firm Deficit units roker Intermediaries uesTc

6 Finance School of Management Fund Flows via Market Intermediaries broker Markets Surplus Units Deficit Units A household buys shares of stocks from a firm Dividend reinvestment plans

Finance School of management Fund flows via Intermediary Markets Savings at a bank a loan to a firm Surplus units Deficit units Intermediaries uesTc

7 Finance School of Management Fund Flows via Intermediary Markets Intermediaries Surplus Units Deficit Units Savings at a bank A loan to a firm

Finance School of management Fund Flows via Intermediary and Market An insurance Markets account Surplus units Deficit units Intermediaries uesTc

8 Finance School of Management Fund Flows via Intermediary and Market Markets Intermediaries Surplus Units Deficit Units An insurance account

Finance School of management Fund flows via markets and Intermediaries Markets Surplus units Deficit units a finance company making loans to households Intermediaries uesTc

9 Finance School of Management Fund Flows via Markets and Intermediaries Markets Intermediaries Surplus Units Deficit Units A finance company making loans to households

Finance School of management Funds flow: Disintermediation Markets Surplus units Deficit Units Intermediaries uesTc 10

10 Finance School of Management Funds Flow: Disintermediation Markets Intermediaries Surplus Units Deficit Units Markets Intermediaries Surplus Units Deficit Units