Money, Banking and Finance Assignment Solution

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Page|1Money, Banking and Finance (APC 312)Tran Linh TrangTeacher: Tran Huu TuyenStudent ID: 209233898/1Word count: 3029January 8, 2021Banking Academy of Viet Nam
Page|2UNIVERSITY OF SUNDERLANDBA (HONS) BANKING AND FINANCEorBA (HONS)ACCOUNTING AND FINANCIAL MANAGEMENTStudent ID:209233898/1Student Name:Tran Linh TrangModule Code:APC312Module Name / Title:Money, Banking and FinanceDue Date:08th January 2021Centre / College:Banking Academy of Viet NamHand in Date:08th January 2021Assignment Title:Individual assignmentStudents Signature: (you must sign this declaring that it is all your own work and all sources ofinformation have been referenced)Trang
Page|3Table of ContentTable of content3Part A.The major objective of credit and capital markets is to finance companies, households andgovernments. Critically analyse this statement examining the different routes through which funds canflow from the surplus to the deficit sector.1.The different routes through which funds can flow from the surplus to the deficit sector.................42.The major objective of credit and capital markets is to finance companies, households andgovernments.........................................................................................................7Part B.Critically analyse the State Bank of Vietnam’s role in achieving monetary policy goals and discussthe merits and limitations of central bank independence.1.What is monetary policy..........................................................................................82.Monetary policy in Vietnam....................................................................................8a.Tools..................................................................................................................8b.Intermediate Target.................................................................................................10c.Final goals ..........................................................................................................123.Central bank independence.....................................................................................13Part A
Page|41.The different routes through which funds can flow from the surplus to the deficit sector.Figure1. The fund flow of financial systemTraditionally, financial system functions as an economic platform for transferring funds among households,firms, and governments, from surpluses to deficits (Mishkin, 2010). There are two basic mechanisms bywhich funds flow between surplus spending units and deficit spending units takes place in the economy:direct and indirect finance.Therein,indirect financeroute is the movement of funds that occur indirectly from lenders to borrowersthrough financial intermediaries (financial institutions) (Howell, 2005)Figure2. Fund flow of indirect financeIndirect finance includes financial intermediaries which are coalitions of agent that combine to providefinancial service and make transaction between surplus and deficit such as commercial bank, credit unions,financial competitions and micro- finance institutions (Haan and Oosterloo, 2009) and credit markets are apart of indirect finance. The main and regular activities of credit market are the concentration of idle capitalin the economy, using that capital to supply those in need of capital and the provision of financial services.
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