The Role of Financial Institutions in Financial Markets Paper
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The Role of Financial Institutions in Financial Markets Paper
Many businesses have to use their capital to borrow money for improvements or new investments. Commercial banks, mutual funds, and investment banks are used for this purpose. The financial markets help to determine rates to use for the loans or deposits used by the borrower. The paper will discuss commercial banks, mutual funds, and investment banks and the financial markets: capital, futures, and money market used.
Commercial Banks
Commercial banks are a part of the largest group of depository institutions. They are measured by their asset size and perform functions similar to savings institutions and credit unions. Savings institutions accept deposits (liabilities) and make loans (assets). The difference of these institutions is in the composition of assets and liabilities. Commercial banks have several types of non-deposit sources of funds. Loans include consumer, commercial, and real estate. Commercial banking activity is also regulated separately from the activities of savings institutions and credit unions. Within the banking industry there is a significant variation among the structure and composition of the assets and liabilities of the different sizes of banks. Businesses, governments, and sometimes individuals borrow or lend funds for short periods of time (Kidwell, Blackwell, & Whidbee 2008).
Commercial banks provide transactional, savings, and money market accounts and accepts time deposits. The Glass–Steagall Act was introduced to the U.S. Congress to require banks to engage only in banking activities, whereas investment banks were limited to capital market activities (EHow 2011). Like the bank I work for, many banks offer both commercial and retail banking services.
Commercial banks use the money market. Treasury bills, negotiable CD’s (Certificate of Deposits), commercial paper, and federal funds are the major instruments of money markets (Kidwell et al 2008)....
Many businesses have to use their capital to borrow money for improvements or new investments. Commercial banks, mutual funds, and investment banks are used for this purpose. The financial markets help to determine rates to use for the loans or deposits used by the borrower. The paper will discuss commercial banks, mutual funds, and investment banks and the financial markets: capital, futures, and money market used.
Commercial Banks
Commercial banks are a part of the largest group of depository institutions. They are measured by their asset size and perform functions similar to savings institutions and credit unions. Savings institutions accept deposits (liabilities) and make loans (assets). The difference of these institutions is in the composition of assets and liabilities. Commercial banks have several types of non-deposit sources of funds. Loans include consumer, commercial, and real estate. Commercial banking activity is also regulated separately from the activities of savings institutions and credit unions. Within the banking industry there is a significant variation among the structure and composition of the assets and liabilities of the different sizes of banks. Businesses, governments, and sometimes individuals borrow or lend funds for short periods of time (Kidwell, Blackwell, & Whidbee 2008).
Commercial banks provide transactional, savings, and money market accounts and accepts time deposits. The Glass–Steagall Act was introduced to the U.S. Congress to require banks to engage only in banking activities, whereas investment banks were limited to capital market activities (EHow 2011). Like the bank I work for, many banks offer both commercial and retail banking services.
Commercial banks use the money market. Treasury bills, negotiable CD’s (Certificate of Deposits), commercial paper, and federal funds are the major instruments of money markets (Kidwell et al 2008)....