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Financial System Roles in Singapore

The document outlines the major components of the financial system including households and firms, financial intermediaries, financial markets, and governments. It also discusses the roles of various participants in the financial markets like borrowers, lenders, brokers, and speculators. Finally, it examines Singapore as a financial center and the prerequisites, banking structure, central bank roles, and types of bank business that have contributed to its success.

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285 views11 pages

Financial System Roles in Singapore

The document outlines the major components of the financial system including households and firms, financial intermediaries, financial markets, and governments. It also discusses the roles of various participants in the financial markets like borrowers, lenders, brokers, and speculators. Finally, it examines Singapore as a financial center and the prerequisites, banking structure, central bank roles, and types of bank business that have contributed to its success.

Uploaded by

api-3695734
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

BUSINESS FINANCE/

FINANCIAL MARKETS & INSTITUTIONS


[B Sc (Hons) in Management]

SEMINAR 7
The Financial System

1. Households
 Main providers of finance (or “Surplus Agents”)
2. Firms
 Users of finance (or “Deficit Agents”)

PREFERENCE :
Households Firms

Risk

Liquidity of funds

Maturity of funds

5. Governments
 Regulate the financial markets
 Influence financing and investment decisions by taxing the
financing choices differently
The Financial System

 Financial Intermediaries
 Role : transfer funds from Surplus Agents to Deficit Agents
 Basis :
– Economies of Scale

– Diversification

 Functions :
– Provision of payment mechanism

• Cheques

• Cards

• Wire transfers
The Financial System

 Financial Intermediaries
 Functions :

– Portfolio transformation

• Maturity/Liquidity

• Risk

• Asset/Volume

– Reduction of cost

• Search

• Contract

• Information
The Financial System
 Financial Markets (where financial assets are traded)
 Role :

– Pricing of assets

– Financial discipline

 Classification :

– Types of claims/assets

– Date of issuance

– Maturity

– Means of settlement

– Organisational structure of market


The Financial System

 Financial Markets (where financial assets are traded)

 Participants :

– Borrowers/lenders

– Brokers/agents

– Market makers/dealers

– Arbitrageurs

– Hedgers

– Speculators
The Financial System

Financial Markets

Deficit Agents Surplus Agents

Financial
Intermediaries

Regulated by Government
Singapore as a Financial Centre

 Prerequisites of a Financial Centre


 Strong domestic economy
 Stable currency
 Strategic location
 Presence of international institutions
 Active domestic banks

2. Banking Structure
 Full banks
 Wholesale banks
 Offshore banks
 Representation Offices
Singapore as a Financial Centre

1. Bank Business
 Interest Income
– Deposit
– Loans
 Fee-based Income
– Financial planning
– Corporate finance
– Bancasurrance
– Custodian
– Payment mechanism
– International trade
 Trading Income
Singapore as a Financial Centre

1. Central Bank (Roles & Responsibilities)

 Banker/financial agent of the government

 Banker of last resort to financial institutions

 Regulates of the banking and financial industry

 Stimulates the financial development of Singapore as a

financial centre

 Liaises with international organisations

 Provides important monetary and financial publication


FINANCIAL MARKETS &
INSTITUTIONS

Explain the main functions and


role that both banks and other
institutions play in the financial
system of Singapore, giving
examples where appropriate.

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