Financial institutions
Role
To monitor, control and guide various industries to protect customers.
Drawer entries on a cheque
name of payee
amount to be paid
signature
amount to be paid
Lower & Higher bank rate
Lower - Expands economic activities
Higher - helps reduce economic activities.
What are they?
Central bank
FSC
JDIC
Functions of central bank
government bank
issues currency
bankers bank
Lender of last resort
Minimum reserve requirements
Increase
Increasing- the lending financial institution has less money available to lend out.
What is financial regulations
rules that govern what financial institutions can do
Three types
Central Bank, Credit unions, building societies, micro finance, commercial banks, Insurance, Government agencies
Parties
drawer, drawee, payee
Bank rate
interest rate at which a nations central bank lends money to commercial banks.
What is a statutory body?
set up by law enact legislations on behalf of a country.
Function
enforce regulations and licenses of financial activities.
Who is the drawer
account holder
assets which can be converted into cash on short notice to meet anticipated expenses. Rise in liquid assets rati0 = increase of bank deposit to central bank = reduces the amount of money in circulation and restricts borrowing.
Minimum reserve requirement. Decrease
Decrease -banks are able to loan more money, which increases the overall supply of money in the economy.