Financial Institutions

• Bank:

  • Accepts deposits from the general public and gives out loans
  • Offers different services for different loans e.g. home loan
  • Makes money from investments and interest
  • Services include Overdraft, Commercial Bills, Factoring, Mortgage, Debenture, Unsecured Notes, Leasing, Term Loan
• Investment Bank:

  • Deals with raising large amounts of capital by underwriting share issues
  • Wants some equity in the business borrowing funds to influence the direction of the business’s activities
  • Assists businesses involved in mergers and takeovers
  • Provides advice and arranges various types of finance for businesses
• Finance Companies:

  • Raise funds through issuing debentures
  • Major issuers of loans, lease finance, and factoring
  • Typically have higher interest rates but are more accessible
  • Services include commercial bills, factoring, leasing finance, debentures, unsecured notes
• Insurance Companies:

  • Raise funds through policy and premium payments
  • Lend to businesses for interest and profit
  • Have high-interest rates but are easily accessible
  • Services include commercial bills and debentures
• Superannuation:

  • Individuals set aside 10.5% of income for superannuation
  • Superannuation companies lend money to businesses for interest payments
  • Businesses receive money, superannuation earns money, and pays back to individuals upon retirement
  • Services include commercial bills and debentures
• Unit Trusts:

  • Offered to the public for investment
  • Money from the sale of units is pooled and invested in financial assets by the trustee
• ASX:

  • Stock exchange in Australia
  • Acts as a primary market for businesses to issue new shares
  • Acts as a secondary market for the purchase and selling of pre-owned securities
  • ASX funds equity finance
• Financial Institutions Include

  Banks

  Investment Banks

  Financial Companies

  Insurance Companies

  Superannuation

  Unit Trusts

  ASX