Role of Financial Institutions in Financial Markets - 825 Words

Role of Financial Institutions in Financial Markets (Essay Sample) Content: Role of Financial Institutions in Financial MarketsNameInstitutionRole of financial institutions in financial marketsA financial market is an all-encompassing term that defines a market place where sellers, potential and actual buyers continuously partake the trading of financial assets (Wilson, Casu MacMillan, 2013). It involves the transfer of funds from lenders or savers who have surplus units to borrowers and spenders who have deficit units owing to their present investing opportunities (Mishkin Easkins, 2014). These assets encompass currencies, bonds, equities, and derivative. In a nut shell, trading usually involves short term assets such as treasury bills to long term ranging assets such as bonds and long term liabilities. Financial markets are present in virtually every country worldwide. The major classifications of significant financial markets include the money markets, the capital markets, bond markets, stock markets, cash or spot markets, foreign exchan ge markets and interbank markets, derivative markets, primary and secondary markets (Mishkin Easkins, 2014). Financial markets are outlined as containing internal and external market forces that influence the prices of the securities involved, rudimentary regulations that govern the costs of trading and the fees involved, and transparent pricing (Bliss Kaufman, 2013). To ensure these standards are adhered with, the financial markets have put in place regulators, particularly for the protection of the interests of the various players in the industry along with maximizing shareholders value. As such, regulators have been put in place to govern commercial banks, investment banks, forex traders, insurance companies, underwriting stock or bond insurance, savings and credit cooperative societies, pension funds, and mutual funds (Bliss Kaufman, 2013). Majority of such institutions are regarded as financial intermediaries. This paper will focus on the main financial institutions, outlini ng the prime industry players in each of them. Financial institutions can be divided into two main categories; depository institutions and nod-depository institutions (Wilson, Casu MacMillan, 2013). Depository institutions are those that receive deposits from persons with surplus units and subsequently deliver credit to persons with deficit units. The depository institutions accept deposits that are usually liquid except for fixed deposits, they accept the risk of loans and they also diversify their loans (Wilson, Casu MacMillan, 2013). Their major sources of income are the interest that arises from offering credit, transaction fees, and income from other investments that they engage in. Major depository institutions include commercial banks, savings institutions, and credit unions (Wilson, Casu MacMillan, 2013). Commercial banks display themselves as the prevailing depository institution. Commercial banks offer an assortment of financial services, notably their varied depos it accounts (Mishkin Easkins, 2014). They conduct the function of offering loans to borrowers as well as engaging in acquisition of debt securities. Commercial banks are nondiscriminatory as they serve both the private and public sector. The Central Bank is the main regulatory institution of commercial banks worldwide. Savings institutions consist of savings banks, and savings and loan institutions, commonly referred to as S Ls. These institutions are usually owned by the depositors, and they focus majorly on mortgages (Mishkin Easkins, 2014). Credit unions, on the contrary, act as nonprofit organizations. They are much smaller compared to the other depository institutions and their business is strictly restricted to their individual members (Mishkin Easkins, 2014). Non depository institutions are those that generate funds from other sources independent from deposits. Examples of these institutions are finance companies, mutual funds, securities firms, insurance companies, and pension funds (Bliss Kaufman, 2013). Finance companies generate funds from the issuance of securities to the public. They also act as lenders, whereby they advance funds to individual borrowers as well as small businesses (Bliss Kaufman, 2013). Mutual funds engage in the selling of shares to surplus units. He funds that are collected by mutual funds are used to purchase a portfolio of securities that are to be distributed to the surplus units. Mutual funds focus on both the capital markets and the money markets (Bliss Kaufman, 2013).Security firms perform various functions, notably the broker function, the dealer function and the investment banking function (Bliss Kaufman, 2013). The broker function consists of performing transactions involving securities between two or more persons. Accordingly, they charge a certain fee which takes the form of a bid-ask spread. As dealers, security firms are able to come up with a market involving certain securities due to the altering of thei r stock. The investment banking function involves the underwriting of securities that have been newly issued (Bliss Kaufma...

Education Biography - 1433 Words

Countless leaders, revolutionaries, and scholars have discerned that only through the trials of experience are we able to clearly identify an established pursuit. This prospect of a delayed reward seemingly motivates us to continue in our endeavors. Finding little relevance in experiences void of challenge or difficulty, we discern our interests largely through the upheaval of current understanding. As we mature we realize that we must first embrace where we came from if we hope to continue to develop, to adapt, and to modify and so we recognize that our past experiences have all undoubtedly led us to here. I have been taught that every person is their own project indicating that†¦show more content†¦As the University of Bristol held no affiliation with my college, I was required to take leave of absence from my university with the firm understanding that any coursework I completed overseas would be null and void upon my return, rendering the completion of my degree nearly impossible to attain within four years. Aware that my program at the University of Bristol was only five months in duration, afterward I would be no more a part of the university than when I first applied. As a visiting student, I would need to apply to an alternative educatioal institution upon completion of my program overseas. A traditional collegiate experience now looked highly unlikely. Fortunately, adhering to tradition has never been as aspiration of mine. In the Fall semester of my sophomore year I accepted the position of Public Programs Intern at the Museum of Fine Arts in Boston Massachusetts where I served as a liaison between administrative objectives and public interest. As an employee in the Department of Member and Visitor Services, my colleagues and I worked to identify the demographic of our intended audience in order to attract members of theShow MoreRelatedA Brief Biography On The State Of Education883 Words   |  4 PagesA Brief Biography It is interesting to note that one of the most influential educators and researchers of all time was rejected for a professorship position because she was a woman and because she was overqualified (Fraenkel). Much to the benefit of present day curriculum development, the job rejection landed her in a series of positions that would eventually lead to her work with the U.S. Office of Education. 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Comparitive essay on contrasting leadership policies instituted by Mobutu and Nyerere from 1960-1980 free essay sample

The number of similarities between Mobutu’s rule in Zaire and Nyerere’s rule in Tanzania in fact are outweighed by the large extent of the differences between the economic and political implications made by the respective leaders. During the period between 1960 and 1980 policies put in place by the leaders of Tanzania and Zaire greatly differed, each country having its own rate of successes and failures in governing its people. IN terms of an economical comparison between the two countries considered there are far more differences between both how and what policies and models were followed than there are similarities. The only similarities between them are that both, after independence, having been both colonised by European powers, Tanzania by Germany and the Congo by Belgium, contained mainly an agricultural and mining economy with very little industrialization. Both countries contained a majority of impoverished farmers and miners whose countries main export was primary resources. Both also experienced economic threat when the price of resources dropped worldwide in the 70s and the price of oil skyrocketed during the 70s, as the Congo, then named Zaire, and Tanzania had no oil reserves. This caused each country to rely on foreign aid in the later 80s. Besides these few similarities the economic policies and models followed and instituted by the bordering countries were wildly different. One major difference in the economy in the countries is they decided to follow different models/methods of running the economy. In Zaire, after having implemented a failed attempt at nationalisation of foreign companies and mines, known as Zairinisation, Mobutu changed to a capitalist economy model. He promoted entrepreneurship and growing of businesses which he believed would increase the overall wealth of the country and move from a farming prominent country to one containing a growing industry. Tanzania and its leader Nyerere chose to follow a completely different model, theirs focusing on a socialist economic system he had modified to relate to his predominantly tribal based society, which he promoted. He attempted to equalize the wealth and rights of all inhabitants of his nation by having state control of transport, industry and production, which he obtained by nationalizing insurance companies, banks, and large foreign companies. So in the case of the economic models followed by the countries one can see they are different in almost every way. In relation to the above point, both of the rulers had differing methods of controlling the economy of their countries. Mobutu in Zaire aimed to industialise the raw materials farmed and minerals mined. In this he aimed to greatly increase the industry in his country, creating more jobs and bring in more wealth to the country, which follows his capitalistic model. Tanzanian Nyerere believed rather that an industrialization of the country was not in its best interests. Instead he chose to introduce villagisation policy ujaama that focused on making the Tanzanian nation much more self-sufficient. Seeing the many differences in the methods used in each country for assisting the progression of the economy also denounces the claim that there are more similarities in the ruling of the two countries than there are differences. Due to the different economic methods used in Tanzania and Zaire distinct levels of distribution of wealth occurred. In Zaire Mobutu encouraged the emergence of a wealthy elite that held a majority of the economic power in the country, while in Tanzania Nyerere strived to prevent the emergence of a richer class by instituting his ‘leadership code’ that prohibited a secondary source of income for those in political power. Tanzania also attempted to stay away from the threat of neo-colonialism by remaining economically independent from other nations, both western and African. Though the nation did allow for a few economic ties with China including an interest free loan used to build a railway line and due to a failing of his socialist ujaama campaign he was forced to rely on aid in the later 80s. Zaire on the other hand chose to make use of foreign aid and heavily relied on American and western support throughout his term of power, showing yet another distinction between the economies created by the leaders. In identifying these many differences in the economic rulings of Nyerere and Mobutu it is made obvious there are not as frequent similarities as there are divergent cases. In term of a comparison on the political rulings of the respective heads of state it can also be seen there are many more distinctive and differing cases than there are resemblances. Probably the most evident example of the differences in political affairs of the countries is the fact that both Katanga and Kasai seceded from the nation of the Congo, showing division in the political beliefs of the countries inhabitants, as each seceded state set up their own legislative and government. While Tanzania, Tanganyika at the time, merged with the neighboring state of Zanzibar to form the United Republic of Tanzania, which shows unity and common beliefs in the political idealism of the country. The way in which Mobutu and Nyerere gained political power in their countries also greatly differed. Mobutu only gained power after the previous leader Lumumba was murdered, and after he staged a military coup and took control of the nation. The people of the country had little to no say in regard to how the country was run. Mobutu instituted a single party state, though it seemed to be more of a dictatorship. Nyerere on the other hand received his political power and presidency through a free election containing many political parties. This shows his people had a lot of influence on how he ran the country, at least at the beginning, as he later removed the other opposition parties. These greater differences in the manner in which the leaders gained power also shows more ways in which the politics under the leaders differed. Zaire also differed from Nyerere’s Tanzania in the fact that its government and politics were based on a capitalist society in which anyone could benefit from enterprise and were encouraged to. Mobutu was recorded to have even gone as far as encouraging his people to steal, if only in small amounts,. Mobutu took total control of the capitalist political system and used it to amass a great fortune and greatly enrich those who sided with him in his party. Tanzanian president Nyerere chose to follow a socialist system and focused on stopping those in power from amassing wealth. His Arusha Document of 1967 displayed his interest in leading a socialist equal country. He also later introduced the ‘Leadership Code’ which restricted members of political and governmental power from being involved in external enterprise. This shows yet another difference in the politics of the leaders. IN terms of alliance with external and foreign countries Zaire openly aligned itself to the USA and other western powers in both trade and often in resorting to financial and other aid. Nyerere chose instead to lead his country non-aligned to any major power. The state of alignment of these countries also determined whether they were involved in Cold War politics. Zaire, being in an alignment with western capitalists was greatly involved, while Tanzania was able to avoid getting involved on either the capitalist or communist sides of the Cold War. These political methods once again displays differences in their political make up. Also included in the political section of the countries is the great fragmentation of the people in Zaire which turned into often armed struggles and suppression by the government. Zaire during the 1960s to 80s was split into 4 regimes of which three were supported by western powers and the other by the USSR showing turmoil in the idealism of the people. Contrasting Zaire was Nyerere’s use of incorporating all of his peoples traditions and religions as well as a sense of national unity to create a sense of national pride which all inhabitants shared. This restricted the amount of fragmentation of his people and he was able to satisfy his countries people, though later on in his rule he was forced to make his ujaama villagisation compulsory which created revolts in the farming communities. The two countries are shown here to have different levels of political fragmentation displaying less similarities exist than the extent the defer from one another. Throughout the countries and their leader’s ruing terms many differences in both the political make up and the economical methods are shown. In seeing the fact that both the government and public affairs, as well as the way in which money flows in each of the countries differ greatly it is possible to deduce that the extent in which the two leaders and their policies contrast one each other far outweigh the similarities during the period of time through t the 1960s and 1980s.