CH 3. Banks and Financial Institutions

Question 1

What is a FI?

Answer 1

FI - an organizatoin offering financial services and includes both banks and (NBFIs) nonbank financial institutions. Commercial banks, investment banks, NBFIs including broker-dealers, asset managers, and insurance companies.

FI’s help firms obtain capital, invest funds and maage treasury operations via various products and services.

Question 2

Commercial Banks

Answer 2

an FI that accespts deposits and makes commercial loans. Must possess a federal or state charter.

Primary services offered include depository accounts and credit services. Transaction processing and information reporting. May offer trade services, FX services and financial risk management services.

Question 3

Depository account Types.

(Country specific regluations for opening accounts)

Answer 3

Storing cash.

DDA - Demand deposit account(Checking account)

TDA - Time deposit accounts (CD’s)

Question 4

SWIFT

Answer 4

-first 4 characters, bank code(alpha) -next 2, Country code(Alpha) -Next 2, Location code (Alpha) -Last 3, Branch code, optional(XXX for primary office)

Question 5

What services do investment banks provide?

Answer 5

-Underwriting -Facilitating mergers -Acting as a broker

Question 6

What are the special purpose FI’s?

Answer 6

1. Industrial Banks - Limited in scope deposits and loans only 2. Captive Finance Companies - finance for a corporations customer base 3. Factors - provide ST financing to companies for their AR 4. Insurance Companies - …

Question 7

Credit Services