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Financial Institutions: An Introduction

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Language:  English
Financial “institutions” covers the mainstream financial intermediaries (banks and investment vehicles), the quasi-financial intermediaries, as well as the ancillary financial entities.
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To say that financial institutions play a significant role in the financial system and the economy is a huge understatement. They evolved over centuries to perform functions desired by the general public, the corporate sector, and government. At the very centre of the financial system are the private sector banks, which have the responsibility of, making loans and taking deposits, and the creation of new money (ie bank deposits, because the general public regards deposits as the means of payments), which arises as the outcome of new bank loans extended. The central bank has the responsibility of influencing the growth rate in bank credit extension / money creation via interest rate control. The investment vehicles, such as the retirement funds, collective investment schemes, long-term insures, and so on, are the custodians of the public’s savings, and the drivers of investments in the economy. In addition to these mainstream financial institutions we have quasi-financial institutions, such as development finance institutions, finance companies, investment trust companies, credit unions, and so on. There are also the ancillary financial entities, without which the financial system will not function well: regulators, financial exchanges, fund managers and securities broker-dealers.

  1. Context and functions
    1. Study outcomes
    2. Introduction
    3. Financial system
    4. Categories of financial institutions
    5. Financial intermediaries
    6. Quasi-financial intermediaries
    7. Ancillary financial entities
    8. Summary
    9. Functions of financial intermediaries
    10. References
  2. Deposit intermediaries: banking system
    1. Study outcomes
    2. Introduction
    3. Central bank
    4. Commercial banks
    5. Investment / merchant banks
    6. Specialised and regional banks: mutual banking intermediaries
    7. Specialised and regional banks: savings banks
    8. Specialised and regional banks: regional rural banks
    9. Specialised and regional banks: Islamic banks
    10. Other banking institutions: discount houses
    11. References
  3. Non-deposit intermediaries: investment vehicles
    1. Study outcomes
    2. Introduction
    3. Contractual intermediaries: long-term insurers
    4. Contractual intermediaries: retirement funds
    5. Collective investment schemes: securities unit trusts
    6. Collective investment schemes: exchange traded funds
    7. Alternative investments: hedge funds
    8. Alternative investments: private equity funds
    9. References
  4. Quasi-financial intermediaries
    1. Study outcomes
    2. Introduction
    3. Development finance institutions
    4. Short-term insurers
    5. Investment trust companies
    6. Open-ended investment companies
    7. Finance companies
    8. Special purpose vehicles
    9. Securities broker-dealers
    10. Credit unions / savings and credit co-operatives
    11. Friendly societies
    12. Buying associations
    13. Micro-finance institutions
    14. References
  5. Ancillary financial entities
    1. Study outcomes
    2. Introduction
    3. Financial exchanges
    4. Securities broker-dealer firms
    5. Fund managers
    6. Regulators
    7. References
Quite informative and interesting, I was expecting a little bit more in-depth explanation and examples.
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About the Author
Prof.

Prof. Dr AP Faure

Alexander Pierre Faure graduated from Elsenburg Agricultural College after school and went on to Stellenbosch University where he graduated with BA (Commerce), Hons BA (Economics), MA (Economics), and PhD (Economics).

He also successfully completed the Stockbroker Examination Requirements at Witwatersrand University (and is a registered Stockbroker - presently non-broking status).

He first worked for the central bank, where he was involved in compiling the monetary statistics (money stock and sources of change, and money market liquidity analysis) and later in the execution of monetary policy.

His career after central banking included private sector banking (the recipient of monetary policy), stockbroking (influenced by monetary policy) and interest rate analysis (reading monetary policy).

After his private sector experience, he became an academic and held the positions Investec Chair in Money and Banking (at Rhodes University and the University of Fort Hare) and Foord Chair in Investments (at Rhodes University).

After retirement he was appointed Professor Emeritus at Rhodes University, and remains engaged in research.  

He has published widely, including books and papers.

He also served on a number of boards of directors, holding the positions of Non-executive Director and Managing Director.