ba105_sme_lnt_tee_may11.pptVIP

Copyright ? 2009 Pearson Prentice Hall. All rights reserved. Lecture 1a. Fundamentals of Financial Institutions Lecture 1a. Financial Institutions, Structure and Crisis Learning Outcomes Financial Institutions and structure Financial crisis Copyright ? 2009 Pearson Prentice Hall. All rights reserved. 15-* Copyright ? 2009 Pearson Prentice Hall. All rights reserved. 15-* Basic Facts About Financial Structure Throughout the World The financial system is a complex structure including many different financial institutions: banks, insurance companies, mutual funds, stock and bonds markets, etc. Copyright ? 2009 Pearson Prentice Hall. All rights reserved. 15-* Basic Facts About Financial Structure Throughout the World The chart on the next slide how nonfinancial business attain external funding in the U.S., Germany, Japan, and Canada. Notice that, although many aspects of these countries are quite different, the sources of financing are somewhat consistent, with the U.S. being different in its focus on debt. 15-* Sources of Foreign External Finance Copyright ? 2009 Pearson Prentice Hall. All rights reserved. 15-* Facts of Financial Structure Stocks are not the most important source of external financing for businesses. Issuing marketable debt and equity securities is not the primary way in which businesses finance their operations. Copyright ? 2009 Pearson Prentice Hall. All rights reserved. 15-* Facts of Financial Structure Indirect finance, which involves the activities of financial intermediaries, is many times more important than direct finance, in which businesses raise funds directly from lenders in financial markets. Financial intermediaries, particularly banks, are the most important source of external funds used to finance businesses. Copyright ? 2009 Pearson Prentice Hall. All rights reserved. 15-* Facts of Financial Structure The financial system is among the most heavily regulated sectors of economy. Only large, well-established corporations have easy