Other institutions l.jpg
This presentation is the property of its rightful owner.
Sponsored Links
1 / 17

Other Institutions PowerPoint PPT Presentation


  • 53 Views
  • Uploaded on
  • Presentation posted in: General

Other Institutions. Economics 71a Spring 2007 Mayo, Chapter 4 Lecture notes 2.4. Institutions. Commercial banks Investment managers Mutual funds Pension funds Hedge funds Money market mutual funds Insurance companies Others. Commercial Banks. Consumers Deposits/savings

Download Presentation

Other Institutions

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Other institutions l.jpg

Other Institutions

Economics 71a

Spring 2007

Mayo, Chapter 4

Lecture notes 2.4


Institutions l.jpg

Institutions

  • Commercial banks

  • Investment managers

    • Mutual funds

    • Pension funds

    • Hedge funds

  • Money market mutual funds

  • Insurance companies

  • Others


Commercial banks l.jpg

Commercial Banks

  • Consumers

    • Deposits/savings

    • Lending/transactions

      • Consumer loans

      • Home mortgages

      • Checking accounts

      • Credit cards

      • Debit cards

      • Foreign exchange

      • Brokerage (recent)


Commercial banks4 l.jpg

Commercial Banks

  • Firms

    • Cash management

    • Lines of credit

      • Loan of varying magnitude

      • Similar to credit card

    • Bank loans (term loans)


Commercial banks5 l.jpg

Commercial Banks

  • Intermediary roles

    • Between lenders and borrowers

    • Repackaging financial products

  • Regulatory environment

    • Key aspect of monetary policy

    • Federal Deposit Insurance Corporation (FDIC)

    • Federal Reserve System


Related institutions l.jpg

Related Institutions

  • Thrifts (S&L’s)

  • Credit unions


Bank regulations l.jpg

Bank Regulations

  • Reserve requirements

    • Deposits with specific banks

    • Cash

  • Deposit insurance/FDIC

    • $100,000 per account limit

  • Bank failures and bank runs


Bank investment bank separation l.jpg

Bank/Investment Bank Separation

  • Banks versus Investment Banks

    • The Glass-Steagall act (1933)

    • Repealed 1999

  • Now separation is not required

  • Example:

    • Citigroup


Investment managers l.jpg

Investment Managers

  • Mutual funds

  • Pension funds

  • Hedge funds


Mutual funds l.jpg

Mutual Funds

  • Function

    • Consumer investments -> Firms

  • Types

    • Stock (invest in stock market portfolios)

    • Money market (short term lending to firms)

    • Bond

    • Real Estate


Mutual funds11 l.jpg

Mutual Funds

  • Allow consumers to better diversify

  • Gather and process investment information

  • Major industry in Boston


Pension funds l.jpg

Pension Funds

  • Manage/invest employee savings/pension plans

  • Similar in spirit to mutual funds

  • Hired by employer


Retirement systems l.jpg

Retirement Systems

  • Defined benefit

    • Contributions to employer

    • Receive formula at retirement

    • Do not control assets

  • Defined contribution

    • Contributions made to employees own account

    • Receive lump sum at retirement

    • Employee controls assets

    • Transferable/increasing


Hedge funds l.jpg

Hedge Funds

  • Large investors

  • Less regulation

  • Broader strategies

    • Derivatives

    • Short sales

    • More risk??

  • Growing fast


Money market funds l.jpg

Money Market Funds

  • Purchase only low risk securities

    • Government bonds

      • Treasury bills, Treasury bonds

      • Tax anticipation notes

    • Short term corporate debt

      • Commercial paper

    • International low risk securities


Insurance companies l.jpg

Insurance Companies

  • Insure individual and corporate risks

  • Receive payments (insurance premia)

  • Payout for losses

  • New issues

    • Trading insurance policies

    • Derivatives

    • High tech risk management


Others l.jpg

Others

  • Information and software services

    • Bloomberg

    • Quicken

    • Microsoft

    • Yahoo

    • Google


  • Login