Class of: Banking and finance
Table of contents
Chapter 1 4
Financial system, meaning and its constituent’s elements 4
Chapter 2 5
Financial bank institutions. Meaning and their functions 5
Chapter 3 6
Banking System 6
Non bank financial institutions. Meaning and their functions 6
Chapter 4 9
The role of government in the credit market 9
The role of other financial credit institutions credit in financing the economy in Albania 9
The role of banks in lending activity in the country 10
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Complex of institutions and financial relations that create micro and macro subjects to constitute what we call the financial system, which is one of the most important components of an economy but also one of the most regulated sectors of the economy.
Key functions of financial:
1-channeling of funds from savers, who have surplus funds (savings) to users who have a lack of, funds (investment).
2 - Making payments and various transactions with lower cost by enabling savers and businesses to benefit from the financial markets.
These two important functions of the financial system affect the growth of each individual economic welfare and economic efficiency.
Constituent elements of financial system
1-Fiancial market-defined as place where are traded and face supply the demands and supply for financial instruments between economic agents (surplus and deficit).
2 -financial instruments-property titles, promises or evidence related to the transfer of obligations between the contracting parties.
3 -Financial institutions-are defined as financial organizations that are involved in the trading of financial instruments and enable the channeling of funds between economic agents participating in financial market.
Government regulates financial markets for three reasons:
1-to increase the information available to investors
2-to ensure the efficiency of the financial system
3-to improve the control of monetary policy.
Categorization of financial institutions:
Bank financial institutions including the C.B and the second-tier banks.
Non-financial institutions, which are divided into two groups:
- Contractual institutions consist of insurance companies and pension funds
- Intermediary investment- financial companies and mutual funds
Financial bank institutions. Meaning and their functions
What is a Bank?
* An institution that accepts deposits, provide loans, pay checks, and performs many other financial services for the entire public.
* Bank is a legal entity with headquarters in the Republic of Albania, which carries out banking and other activities as referred to in the law "On banks in the Republic of Albania".
Perform "banking" means acceptance of deposits or funds from the public and their use for the allocation of credit in the name and on behalf of its own, as well as the issue of the means of payment in the form of electronic money.
Banks are financial institution mediation, which serves for the realization of the establishment of the necessary equilibriums between the cash surplus or entities and those deficient in economy. Unlike other financial institutions bank transforms the maturity of these funds free short-term and long-term maturity of cheap funds in the near term. It accomplishes free channeling funds (savings in liquid form) of individuals, companies, etc. in the form of:
A) Committed bank term deposits give you interest towards a very blocked for a certain term.