How To Sign Mississippi Banking IOU

How to industry sign banking mississippi iou

today we're going to be looking at section 8 business finance I think I did a video on some aspects of section 8 when we looked at one of the past papers but I don't think I did a dedicated video for section 8 business finance so that's we're gonna jump in with right now all right so objective number one identify various financial institutions and for that one that's a common sensical question that's a common sensical topic we know what the various financial institutions are around us so we have a central bank you have commercial banks and then we have non-bank financial institutions like credit unions insurance companies and you know sort of societies we are those micro lending agencies such as those you know those like cash lending institutions that you can go to get a cash a cash advance before your next paycheck and then when the picture goes are gonna pay them back so you know those lenders only and of concept government agencies so central banks for example in the OSS region the main central bank is are the only central bank in the OECS would be the eastern caribbean central bank most regions that have their own currency tend to have a central bank that governs that currency so for example in Trinidad you have you know Trinidad central bank in Jamaica Jamaica the own Bank again has their own Bank babbies as the own bank so central banks are those that are basically the ones who control the monetary policy of a certain region that ones who you know the money supply the supplying of money and those kind of things no commercial banks everybody know about commercial banks those are your Scotia banks your public banks you know in division even national banks so those are the commercial banks those banks are you go to open your savings account a checking account make a deposits go for a loan those are the commercial banks you don't even banks again the the Orleans banks are individually public bank you have scotia bank your first Caribbean bank you have other numbers a number of domestic local banks then you have non-financial institutions that create unions so you have some corporate unions you have various other you know the nursing credit union the police trade union credit unions that at the time form by members to help each other when they want when you want to borrow some money then you have insurance companies that is inadequately surgical those companies that tend to when you open a policy with them an insurance policy they have some save and aspect to that policy so you can save with those institutions you can borrow money from them you know against your life insurance or whatever you are whatever services they offer so those are simple simple financial institutions around the region so we're not able to in depth with that one so yeah banks which are the main ones that control the finance in the areas divisions ok services of the two because the first one just listing the financial institutions in to describe the functions and services offered by for the actual institutions and again pretty straightforward functions offered by financial institutions you can get a loan you can get you know cash advances you can have savings you know you can have fixed deposits you can make payments to these agents use these financial institutions you can buy stocks and bonds to these financial institutions so you can invest to them you know you can work with stock market you have other services like you know night safe deposits you have your box you you deposit boxes that you can put valuable things into for Security Bank put them in a big safe you have online banking you have you know you can go for advise you know when you want to invest of course they have credit card debit card checks all those kind of things you have the ATM IBM services each way that's online dealings and so remittances you know you have you cut it you you Western Union and you monogram and those things those services banks also handle these things you know your bank your bank jobs etc so again pretty straightforward this services this very common sensical anybody know what functions occurs at a bank you can lisajallen of them so you don't have to go to in depth in these things they're very straightforward so we're gonna get into the meat of the matter which is basically describing the function and role of certain financial institutions for example the financial virtual bodies are government organizations such as the central bank will make a deposit insurance company the financial service commission so we can look at the roles of some of these financial institutions that's the meat of the matter right here now we're gonna deal with so let's jump into this slide one time so of course we have the banks those are like I said the main agents in the financial institutions and of course we know somebody services listed earlier these are some more provide natural services such as Canada cab purchase and sale of foreign exchange bank jars and telegraphic transfers so all these are things that the banks do how does a bank earn revenue now back on revenue by one this spread between interest rates for borrowing and lending to the spread between buying and selling rates of foreign exchange tree fees for bank jobs and other services for payments for use of credit card and debit cards let's break down these first two it's a respect between interest rates for borrowing and lending no this simply means that the bank makes money by for example lending new $10,000 and you have to repay $15,000 so they make a $5,000 e so that's what I'm talking about when I said he this spread between the interest for borrowing and lending that's the money the interest have to pay back because it doesn't make sense to lend me 10,000 and only pay about 10,000 so why did why did Elena then I'm gonna make any money like that so that would lend me 10,000 you have to pay them back 15 or whatever the percentage percentage rate is of the interest rate so that they make money like that so it's always more else have to pay more than you borrowed that's just every bank make them own you have to pay more than you borrow so again the spread between buying and selling with a foreign exchange again you might get a US dollar you might be able to bite for a certain amount but you can only sell it for a certain amount okay so for example in the Eastern Caribbean region normally the US the exchange rate is two point seven one to one US dollar no that's the buying wait no when the bank wants to get the money from me when depositing that money on the bank no they're gonna they're gonna charge a lower rate normally two point six five so it's um sorry difference between what the actual value is and what they asked for is where they make their money because if I go to a band to buy a us from the bank of course I have to cough up 2.71 but I have one u.s. and I'm gonna deposit it on the bank now they're gonna want it for two point six five and then they are gonna in turn sell to somebody else for two point seven one so the difference between what they buy and sell the currency that's all they also make their money a lot of people also invest in my car forex where they trade different currencies so that they can buy when they're up and we buy when they are low and silliman currency is gone you know like the pawn and you run those kind of things so the bank makes money with foreign exchange and of course the obvious one fees for a whole bunch of things lately some credit cards freeze a bank jobs fees to for a certain amount of money on your account fees for you know being able to see if I'm gonna come to the Knicks so a bunch of a whole lot of fees and you know banks gal on the hidden fees some upfront fees a lot of these banks up and that's what makes some of their money also and of course again payments for use of the credit and debit card for example if we used a bank scarred overseas you have to pay extra amount of money for the use of that card also credit cards have a ton of interest so whenever use a credit card you actually spending more for certain product and if you just paid cash because some credit card can be 17% 11% whatever but you gonna spend more money your give back about more money than you initially paid for that product so the interest rates and credit card is a not so in which the bank makes their money alright so banks need funds to cover of course operating expenses expenses such as salaries the risk that customers will default on loan payments of course need to make publishers very called bad debts you know and everybody gonna be able to pay off the loans at the borrow sale banks need money for a windfall you know so they can secure themselves or else may go into problems bankruptcy and stuff like that certainly to have money put aside for when people default up will refuse to pay for your loans or it just cannot pay for your loan the bank or something like that and of course then if you have money to cover the amount deposit that the central bank asked them to keep because if you're supposed to run a commercial bank you supposed to be able to have a certain amount of money on hand in deposit just in case you can't have money going in a note just like that himself a lot of money and that is said by the the central bank so the central bank might tell this Bank might tell scotia bank okay for you to operate you need to maintain at least fifty percent deposit in your facilities so you have to always have fifty percent of the total assets in deposit in reserve just in case you know something happens so this is said by the central bank so but a bank needs the commercial bank needs money in order to you know in order to meet the obligations to the central bank as to how much money should be holding then of course you have to pay taxes you're a private institution or whatever you have to pay taxes to the government you make corporate profits you have to pay taxes to the government and of course if you again if you're a public or private institution you have shareholders and you have to pay dividends annually if you make a good enough profit so you have to pay dividends at the keep money to pay dividends now we winch is already services by the commercial banks so you can just freeze video if you want to take down a few but you want to dis already so that's what you services checking accounts saving accounts fixed deposits that's we put a certain amount of money in the bank and you can't touch it until let's say two three years and they tend to have higher interest rates than a regular savings account so that's one week an investor can put a five thousand in a fixed got a fixed deposit and make it a five percent interest rate per annum and it adds up every year and after whatever is stipulated amount of time ago for it you're gonna have a chunk of change extra the right initially invested so lots of fixed deposits are all about then of course services pay you make payments to cheques debit cards bank drafts or you know you telegraphic transfer we call a wire transfer and stuff like that then of course you have loans mortgages foreign exchange all set for and of course you safety deposit boxes other financial companies as you mentioned earlier so this is just repetition you have trust companies you have merchant banks yet Development Bank you have offshore banks you have specialist mortgage lenders insurance companies and many many others okay so these are all other financial companies but again the bank is the main one that we deal with central banks now what are central banks as I said before central banks are the the institutions that are basically creatures of the government the other ones who help to maintain the money supply and control the money supply in a given economy let's see so many other functions function of the central bank to control the currency you're gonna run them down and then gonna break down a few of them so control currency manage public debt promotes financial stability manages monetary policy to influence interest rates issue Treasury bills manages foreign exchange and hold reserves so let's break it down central banks so like Eastern carbon Central Bank ECB Jamaica central bank change that central bank Barbados Diana all the central banks so they have to control the currency so the bank is in charge of controlling the East Sea dollar controlling the tittie dollar the Jamaican dollar the billion dollar whatever so they are basically one so you know the money changed money make security judgments to the money introduced new bills take bills of circulation increase the money supply reduced money supply as they see fit King you know so those are the jobs of the central bank's in terms of controlling the currency that want to control them in the money this the send it out in circulation to take it back off change design all those things that uncontrolled currency the managed public that also so in most of our regions our central banks are the ones that manages a country's national debt so the governments of the regions normally borrow and pay for their debt through the various central bank's ECB again china central bank those things they don't want to manage government public because they are the creature of the government the central banks are that a creature of the government they have authority from the government to be certain things most of the finance ministers tend to be the one so you know obviously these things also to promote financial stability of course it's a bank and they also want the economy to be stable so the other ones who you know change interest with the card and you know if inflation is too high you know may increase or decrease the interest rates based on inflation those kind of things they kind of chill because the other ones they decide whether it should be a floating or maybe a fixed exchange rate whatever all in the name of promoting financial stability you don't want to currency to be hyper inflated are not worth anything so the central bank make sure to promote financial stability they also manages the monetary policy as I said earlier monetary policy are those policies that the government use to achieve certain economic outcomes using the money supply the money system so if they want to let's say for example with juice recession you know improving recession they might lower interest rates and if you become borrow more and that would spur the economy now if the economy have too much things going on you might want to pull back Nikanor a bit economy a bit if inflation is again getting out of hand they might say okay things are the inflation is getting too high things that the price things are going up too high we need to pull back this so the central bank's gonna use monetary policies such as interest rates you know they might be able to increase the interest rates to reduce borrowing from the common folk so those are the weighted control on the monetary supply and of course we said in the next one is influence interest rates and we said that before they can in infants in they can influence interest rates for the commercial banks within the economy so that would affect how much the commercial banks can lend to you know customers at what rate and those kind of things and that could in turn influence how much to borrow because the interest rate is too high nobody gonna borrow if it's low people gotta borrow when you borrow you're gonna take that money bill a house buy a can spend on things to spread economy alright the central bank also issues Treasury bills those are ways that people can invest in the government can buy bonds in the government the Treasury bills is an investment some of them can extend up to 30 years so you can buy them today in 30 years when a mature you get money for that so should rebuild highways can invest in government because sometimes government is almost guaranteed to pay back your money it's like IOU from the government then of course the managing foreign exchange and whole reserves so they are the ones who manage how much foreign exchange how much u.s. so much fun how much you know euros are within the economy something like a nice trick how much individuals can purchase you know based on the economy for example in the Oasis the central bank can dictate how uch you as a person can buy now in Jamaica was surprised to see that you can actually go to the ATM and take out foreign currency canticle us from the Jamaican ATM that's a rarity in the OECS region especially in somebody small islands really big banks do not know that they want to be the one who control live on exchange because you know the foreign exchange the u.s. tend to be the the money of business of global business so you don't want to be having too little in the economy and then it cannot buy goods from suppliers overseas as a government you want to be able to pay people you all overseas India currency first we wanna manage the currency as much as possible then apart from all those financial you know functions the central banks have other functions such as horse commercial banks visual requirements regulates commercial banks operates payment systems a lender of last resort they also research the data collection and analysis financial and economic education so as big these other functions holds commercial banks with your requirement so like I said before commercial banks are required by the central bank to hold a certain amount of money in reserve in case of emergency so that they can operate smoothly you don't want to you know if a number of people come to it Jordan money you don't want to have too little and then the bank your bank up and stuff like that so you need to have a certain reserve held as a commercial bank this is also a way in which the central bank can you know influence how much the commercial bank has to lend second increase the lending or decrease the lending this can also influence the interest rate because it commercial is the central bank said okay Scotia you have the whole let's say 50% in reserve then the only 50 more percent to use for lending and those kind of things but if the bank reduces it and okay Scotia you can only be required to all 25 percent the museum there are of a sudden scotia bank have 75% of the with the monies to do whatever they wanted so they can lend more people you know so it would use interest rate those kind of things so the commercial bank the central bank holds commercial banks with requirements they also regulate the commercial banks meaning they are the ones who set the rules by which the commercial banks should operate the other ones who basically manage our buses the commercial banks they I don't want to tell the commercial banks what to do how to operate they are the ones who are in control of the local commercial banks the answer to is central banks if they get auto line the central bank can pull back their right to do business in the region central bank is the one who's in charge of these things next one operate payment systems of course like I said before the facility that payments for on behalf of the government when they control in the national debt and of course a lender of last resort what this means is that if the central bank the commercial banks are in trouble they can run to the central bank to get a hand to get some to borrow some assets but that's a last last resort when things became frail looking and a he's gonna you know it's over bankruptcy they can go to the Central Bank and the central bank can lend them some you know some funds to get them back on their feet and of course later on they can repay the central bank in you know when they had the financial crisis in 2008 2009 the Federal Reserve that's the central bank of America he fed the Federal Reserve had to bail out my biggest banks in America actually they actually had to lend money to some of the biggest banks in America there's also a situation where there was a bank in Antigua that was on the verge of collapse but the central bank Mississippi had to come in and basically help out that Bank in order because it had that Bank collapse it would have you know weaken the currency union the Eastern currency union so they couldn't allow that to happen so as a lender of last resort at the scooping and trying you know save that Bank also is a key one they asked the research debt collection and analysis so when it when you hear about GDP numbers you know how much the monetary value of goods produced in an economy GDP the central bank is the one who looks into that kind of data when you look at inflation numbers you know if prices are rising in an economy central bank collect that data analyze that data and put it out so when es an economic indicators are being shown around unemployment inflation you know GDP numbers those kind of things that's the job of the central bank they also do data collection and analyze the data to know okay and primarily this high impairment rate is low GDP is high G's law the economy is growing the economy is contracting that's the central bank right there they also do research into a number of things I'm pretty sure most of you I would have had when you have financial literacy month you see people coming around to your schools from the central banks as part of the I did a job at the agenda to you know educate people about the financial systems they actually go wrong and educate people I know in the Oasis they have a lot of you know competitions it's a competition those things you know they try to educate the schoolchildren educate the wider community about financial stuff financial information because that's part of the amount but the job to educate this listener e so those are somebody's soft functions of this central bank so we are going to stay here for no I gosh I'm gonna break up this section in two maybe three videos I don't want to have too long of a video I'm trying to cut down the length so I'm gonna stay here for now so thanks for listening I hope this helps you so like subscribe and make sure you hit that notification bells alright you know when I drop the other video depart to to business finance for principles of business alright so this was principles of business for cysec section eight business finance so stay tuned for part two and Audrey