Money and Banking: Types of Financial Institutions, Funding Structure, and Impact of Bank Failure on Economy

Running Head: MONEY AND BANKING 0
Money and Banking

MONEY AND BANKING 1
Table of Contents
Introduction................................................................................................................................2
Types of the financial institutions..............................................................................................2
Banks......................................................................................................................................2
Insurance.................................................................................................................................2
Stock brokerage firm institution.............................................................................................2
Credit unions..........................................................................................................................2
Commercial banks source their funds from?.............................................................................3
How has the funding structure to the commercial banks changed over the years?....................3
The size and proportion..............................................................................................................3
Has the proportion of lending changed over time?....................................................................4
Financial Review of past 5 years...............................................................................................5
Failure of banks and its impacts on the economy......................................................................7
General impact........................................................................................................................7
Argument 1.............................................................................................................................7
Argument 2.............................................................................................................................7
Arguments in favour of the bank failure....................................................................................8
Argument 1.............................................................................................................................8
Argument 2.............................................................................................................................8
References..................................................................................................................................9

MONEY AND BANKING 2
Introduction
A company which is involved in the business of financial and the monetary transactions such
as services provided in the form of deposits, loans, the investments and exchange of the
currency. There is a wide range of operations available in the financial service sector. This
includes banks, insurance companies, trust companies, investment dealers and the brokerage
firms. Financial institutions provide services to different type of categories and financial
operations are critically important to the economy (Da Gbadji, Gailly and Schwienbacher,
2015). It becomes imperative for the government to keep a check on the banks and the
financial institutions because they play a vital role in the economy of the country.
Types of the financial institutions
Banks
The products and services offered by the financial institutions to the individuals and the
commercial clients is the basic job done by the financial institutions. The banks and the
similar entities offer the financial services such as lending of loans, providing of mortgages,
keeping a track of the savings account and also acts as an agent via currency exchange and
wire transfers.
Insurance
The non-banking financial institutions are insurance companies whether for the individual or
the corporations which provide the hedge against the financial risk. The insurance companies
provide the service like insurance services, securities, buying or selling of the real estates,
providing loans and the credit card facility. Further, the insurance is classified into two
categories general insurance and life insurance (Bruton, Khavul, Siegel and Wright, 2015).
There are number of insurance policies however the most important ones are of the health
category, life insurance, vehicle and residential homes.

MONEY AND BANKING 3
Stock brokerage firm institution
The stock brokerage firm acts as a middleman between the buying and the selling
transactions of the financial securities. The main aim of the brokerage firm is to serve the
clientele of investors and the number of the stockbrokers and with the help of them, the
stocks and securities are being traded. The main services provided by the stockbroking firms
are money market, lending of the loans, mortgages.
Credit unions
The credit unions are described by the various names across the world and is a not for profit
financial cooperative. The credit unions are established and operated by the members unlike
in case of the banks and the financial institutions. The credit unions do not follow the
particular standards. The range of the credit union cannot be decided as at one moment a
team of few individuals to a large organisation with thousands of people can form the credit
union. The services provided by the credit unions are online banking, share draft accounts,
share term certificates.
Commercial banks source their funds from?
How commercial banks fund their loans is a questionable situation after the country has
accounted for the global financial crisis. Generally the commercial banks generate funds
through lending of the money at the higher rates to cover the cost of the money they lend.
Specifically the banks collect interest on the securities and loans and pay the interest on the
deposits, short term borrowings and current deposits (Kidwell, Blackwell, Sias and Whidbee,
2016).