This report provides a comprehensive overview of the financial system, focusing on the roles of commercial banks and other financial intermediaries. It details the structure of financial systems, including regulatory authorities, financial intermediaries, and the instruments used in transactions. The report further explores the similarities and dissimilarities between commercial banks, finance companies, and insurance companies, highlighting their depository functions, credit creation capabilities, and investment activities. A significant portion of the report is dedicated to analyzing the various risks faced by banks, including credit risk, liquidity risk, interest rate risk, market risk, and operational risk, providing insights into their causes and potential impacts. The report also outlines best practices for banks to manage these risks, such as sound asset and liability management, diversification strategies, and the use of specific risk measures like migration analysis and concentration limits. Overall, the report offers a detailed examination of the financial system's components, risks, and management strategies.
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