BANKING AND FINANCIAL INSTITUTION

• Philippine Financial System


  Financial System is like the heart of the human beings, if its stops working then the person is dead in the same way that if the financial system stops working, then the economy would collapse
• Components of the Financial System

  • Banking institutions
  • Nonbank financial intermediaries
  • Commercial banks
  • Specialized government banks
  • Thrift banks
  • Rural bank
  • Offshore banking units
  • Building and loan associations
  • Investment and brokerage houses
  • Financial companies
• Banking in the Philippines began

  16th century
• Obras Pias (Pious Works)


  Establishment by laymen associated with the religious orders, profits were channeled to the construction of churches, government buildings and other charitable religious projects
• Obras Pias


  Source of credit, funds invested in mortgage financing loans, trade with Acapulco and maritime insurance
• Obras Pias


  Funded from legacies and donations of wealthy individuals
• Rodriguez Bank


  One of the first banks that emerged in the 19th century, considered more of a loan association than a regular bank
• British-Orient banks opened in the country as a result of the expanded Philippine European trade that followed the opening of the Suez-Canal in 1869


  1873
• Junta de Autoridades


  Board of authorities in Manila that established the first state bank in the Philippines on August 1, 1851
• Banco Espanol-Filipino de Isabel II


  First state bank, Obras Pias provided 50% of its bank capital
• Chartered bank of India, Australia and China opened in Manila


  1872
• Hongkong and Shanghai Banking Corporation established its Manila branch

  1875
• Monte de Piedad Y Caja de Ahorros


  First mutual savings in the country, unique combination of savings banks and pawnshops, opened in 1882, initial capitalization provided by Obras Pias
• Monte De Piedad and Savings Bank


  New name for the bank after it was renamed
• Banco Espanol-Filipino de Isabel II


  Changed its name to Bank of the Philippine Islands on January 1, 1912
• BPI


  Established correspondent arrangements with a Paris bank for servicing of client transactions with counterparts in Europe and other parts of the world
• BPI is considered as the oldest bank in the country
• American Occupation


  Seven domestic private banks came to existence, branches of Japanese as well as Chinese banks were also opened during the early part of the period
• Postal Savings Bank was put up

  1906
• First agricultural bank


  Established in 1908, assets and liabilities transferred to the Philippine National Bank which was organized in 1916
• The Central Bank of the Philippines was created, establishing a managed monetary system in the Philippines


  Three years after the American regime ended
• Central Bank of the Philippines


  Given the sole authority to issue the country's paper money, regulate and supervise the country's banking system
• Financial System


  Refers to the network of institutions, such as banks, insurance companies, markets, and stock exchanges
• Financial System


  • Provides a framework for mobilizing and allocating financial resources, facilitating transactions, and enabling funds transfer between borrowers and lenders
  • Crucial in fostering economic growth, promoting investment, and supporting an economy's stability and functioning
  • Primary function is to distribute savings from individuals and businesses to productive investments, allocate capital efficiently, and manage risks
• Components of the financial system

  • Financial Institution
  • Financial Markets
  • Financial Instruments
  • Payment and settlement system
  • Regulatory authorities
  • Central Banks
  • Financial Structure
  • Financial Services
• Financial Institutions


  Entities that provide financial services, such as banks, credit unions, insurance companies, investment banks, and pension funds
• Financial Institutions


  • Act as intermediaries between savers and borrowers, channeling funds from savers to borrowers
• Financial Markets


  Platforms where individuals, businesses, and governments buy and sell financial assets
• Types of Financial Markets

  • Stock markets (for trading shares of companies)
  • Bond markets (for trading debt securities)
  • Commodity markets (for trading commodities like gold, oil, etc.)
  • Foreign exchange markets (for trading currencies)
• Financial Instruments


  Monetary contracts that can be traded, including stocks, bonds, options, futures contracts, mortgages, and derivatives
• Financial Instruments


  • Provide a means for investors to invest their funds and for borrowers to raise capital
• Payments and Settlements System


  Enable fund transfer between individuals, businesses, and financial institutions, facilitating the clearing and settlement of transactions, ensuring funds are transferred securely and efficiently
• Regular Authorities


  Governmental or independent regulatory bodies that regulate all financial systems, establish rules and regulations to ensure financial markets and institutions' stability, transparency, and fairness, and protect consumers and investors from fraud, misconduct, and excessive risk-taking
• Central Banks


  The monetary authorities of a country or group of countries, responsible for formulating and implementing monetary policy, controlling the money supply, and maintaining the financial system's stability, also acting as lenders of last resort to provide liquidity during financial stress
• Financial Infrastructure


  Technological systems that support the financial system's smooth functioning, including electronic banking systems, trading platforms, clearing and settlement systems, credit card networks, and more
• Financial Services

  • Loans
  • Deposits
  • Payment services
  • Investment services
  • Insurance services
  • Financial advisory services
  • Risk management services
• Functions of financial accounting

  • Intermediation
  • Mobilization of savings
  • Facilitation of investment
  • Risk management
  • Price discovery
  • Facilitation of payments
  • Capital formation
  • Monetary policy implementation
  • Financial Inclusion
  • Safeguarding financial stability
• Intermediation


  Financial systems act as intermediaries between savers and borrowers, channeling funds from those who have excess funds (savers) to those who need funds (borrowers). This intermediation process facilitates the efficient allocation of capital and promotes economic growth.
• Mobilization of savings


  Financial systems provide a mechanism for individuals and businesses to save money and earn a return on their savings. Through banks, investment funds, and other financial institutions, savings are pooled together and made available for productive investments.
• Facilitation of investment


  Financial systems enable individuals, businesses, and governments to access the capital needed for investment in productive activities. They provide various investment options such as stocks, bonds, and venture capital, allowing entities to raise funds to expand operations, launch new projects, or develop infrastructure.