Banking and financial Institutions_prelim

• What is the main role of banks in emerging market economies (EMEs)?

  Banks are the main supplier of credit.
• Why is credit essential in emerging market economies?

  Credit is essential for unlocking wealth, creating opportunities, providing jobs, and facilitating commerce.
• How do banks contribute to a strong and stable society?

  Banks allow their customers to have a vested interest in a strong and stable society.
• What are the three characteristics of banks?

  Banks are legal entities, licensed and regulated, and empowered to accept deposits and make loans.
• What is the significance of banks being "safe repositories" and "productive lenders"?

  These characteristics are critically important for the functioning of the economy.
• What role do banks play in the payment system?

  Banks are critical intermediaries that help an economy exchange goods and services for money or other financial assets.
• How do banks bridge the gap between lenders and borrowers?

  Banks perform a transformation function to connect the needs of lenders and borrowers.
• What is the integral role of banking in the financial sector?

  Banking affects the country’s economy by providing investment, credit, and infrastructure.
• Why are banks considered the heart and lifeblood of any functioning economy?

  Banks are key to economic growth and development.
• What is one of the primary functions of banks?

  Banks provide a safe and effective method of storing individual wealth.
• How do banks accept deposits?

  Banks accept deposits that are redeemable at par, either on demand or after a certain period.
• What are the options for individuals dealing with liquid funds?

  Individuals can keep cash, hold goods or valuables, invest funds, or place funds in a bank.
• What do banks create to facilitate the transfer of value?

  Banks create instruments such as checks, drafts, wires, and account transfers.
• What is the role of banks in pooling funds?

  Banks provide an efficient mechanism to pool funds to finance economic activity.
• What types of financing do individuals and businesses require?

  Individuals require financing for education, housing, and automobiles, while businesses need funds for capital improvements and expenses.
• How do banks make money?

  Banks make money by lending and investing funds to generate returns that exceed their costs.
• What is the significance of markets in relation to banks?

  Markets are mechanisms for the exchange of goods and services, and banks facilitate these transactions.
• How do banks unlock wealth?

  Banks accept land as collateral to permit mortgages and other forms of credit.
• What does the "Deposit Multiplier" refer to?

  The "Deposit Multiplier" describes the ability of a bank to transform or multiply cash through its deposit-taking and lending activities.
• How do banks facilitate participation in the global economy?

  Banks facilitate transactions, create markets, and build economies, prompting investment and providing jobs.
• What is the primary role of banks?

  Banks take in deposits from those with money and lend them to those who need funds.
• How do banks increase economic efficiency?

  Banks channel funds from savers to borrowers, promoting a better allocation of resources.
• What is direct finance?

  In direct finance, borrowers obtain funds directly from lenders in financial markets.
• What is a financial claim?

  A financial claim is a claim to the payment of a future sum of money and/or periodic payments.
• What are the three ways a financial claim can be redeemed?

  A financial claim can be redeemed on demand, after a stated period of notice, or on a definite date.
• What should banks be able to do during economic cycles?

  Banks should be able to lend money in both upturns and downturns.
• What role does the banking sector play in economic growth?

  The banking sector plays a significant role in the economic growth and development of any country.
• How do banks help poor farmers in developing countries?

  Banks provide credit facilities to poor farmers.
• What are some services banks offer to customers?

  Banks offer interest on deposits, financial advice, and lending services.
• How do banks contribute to the expansion of the economy?

  Banks provide the funds needed for the continued expansion of the economy.
• What distinguishes banks from other financial institutions?

  Banks offer loans, deposits, and payment services as their distinguishing features.
• How do banks act as financial intermediaries?

  Banks stand between savers and borrowers, accepting deposits and providing loans.
• What do savers receive from banks?

  Savers receive interest payments and can withdraw money from their deposits.
• How do borrowers repay loans to banks?

  Borrowers repay loans with interest.
• What do banks return to savers?

  Banks return money to savers in the form of withdrawals, including interest payments.
• What does the BSP Seal logo feature prominently?

  A photorealistic rendering of a Philippine eagle in flight
• What does the eagle in the BSP Seal symbolize?

  The strength of leadership and foresight that the BSP provides in the financial sector
• What do the eagle's outstretched wings and tail feathers represent in the BSP Seal?

  The BSP’s balanced, inclusive approach to growth and development
• What does the eagle's head and eyes facing east signify in the BSP Seal?

  The BSP's vigilance and readiness to seize challenges and opportunities
• What do the talons of the eagle represent in the BSP Seal?

  The strong will, resolve, and monetary and financial tools of the BSP