Financial Institutions

Financial institutions are those organizations, that are involved in providing various types of financial services to
their customers. The financial institutions are controlled and supervised by the rules and regulations delineated by
governmentauthorities.

Examples of financial institutions are the following:

• Banks

• Stock Brokerage Firms

• Non Banking Financial Institutions

• Building Societies

• Asset Management Firms

• Credit Unions

• Insurance Companies

Some of the financial institutions also function as mediators in share markets and debt security markets. There the
principal function of financial institutions is to collect funds from the investors and direct the funds to various
financial services providers in search for those funds.
Financial institutions deal with various financial activities associated with bonds, debentures, stocks, loans, risk
diversification, insurance, hedging, retirement planning, investment, portfolio management, and many other types of
related functions. With the help of their functions, the financial institutions transfer money or funds to various tiers of
economy and thus play a significant role in acting upon the domestic and the international economic scenario.

For carrying out their business operations, financial institutions implement different types of economic models. They
assist their clients and investors to maximize their profits by rendering appropriate guidances. Financial institutions
also impart a wide range of educational programs to educate the investors on the fundamentals of investment and
also regarding the valuation of stock, bonds, assets, foreign exchanges, and commodities.

Financial institutions can be both private or public in nature. The most common forms of financial institutions can be
categorized into the following types:

• Business finance company

• Mortgage finance company

• Car finance company

• Personal finance company

• Personal loan finance company

• Home finance company

• Corporate finance company

Thus, it can be concluded that a financial institution is that type of an institution, which performs the collection of
funds from private investors and public investors and utilizes those funds in financial assets. The functions of financial
institutions are not limited to a particular country, instead they have also become popular in abroad due to the
growing impact of globalization.
For further details, please refer to the following links:
Financial Institutions

• Functions of Financial Institutions • Financial Institution Risk Management

• Valuing Financial Institutions • Financial Institution Fraud

• Banks • Financial Institution Insurance

• Credit Unions • Depository Financial Institution

• Financial Institutions Ratings • Community Development Financial Institution

• Financial Institution Security • Federal Financial Institutions Examination Council

• Regulations of Financial • Roles of International Financial Institutions

Institutions
• Types of Financial Institutions
• Financial Institution Marketing
• Stock Brokerage Firms
• Financial Institutions Management
• Financial Institutions in india
• Financial Institution Compliance

Financial institution
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Finance
In financial economics, a financial institution is an institution that provides financial services
for its clients or members. Probably the most important financial service provided by financial
institutions is acting as financial intermediaries. Most financial institutions are highly regulated
by government bodies. Broadly speaking, there are three major types of financial institution[1]:
1. Deposit-taking institutions that accept and manage deposits and make loans
(this category includes banks, credit unions, trust companies, and mortgage
loan companies);
2. Insurance companies and pension funds; and
3. Brokers, underwriters and investment funds.

Contents
[hide]
• 1 Function
• 2 Corporate
valuation
• 3 Governance
• 4 See also
• 5 References
• 6 External links

[EDIFFUNCTION] Function
Financial institutions provide service as intermediaries of the capital and debt markets. They are
responsible for transferring funds from investors to companies, in need of those funds. The
presence of financial institutions facilitate the flow of money through the economy. To do so,
savings are pooled to mitigate the risk brought to provide funds for loans. Such is the primary
means for depository institutions to develop revenue. Should the yield curve become inverse,
firms in this arena will offer additional fee-generating services including securities underwriting,
and prime brokerage.
[EDICO CORPORATE VALUATIONVALUATION
Relative metrics : Price/Equity Price/Book Value
Use Equity Multiples (as opposed to Enterprise Multiples). To consider how valuing a Financial
Institution's balance sheet is different from a non-Financial firm, consider how an industrial firm
wields capital machinery (asset) and the loans (liabilities) it used to finance that asset. The line is
blurred in Financial Institutions, which must hold deposit accounts (liabilities) to fuel the
issuance of loans (assets). The same accounts are considered loans as they are held in ownership
not of the bank, but of the individual client.
Dividend Discount Model : Earnings-per-share
Dividends-per-share
Discounted Cash Flow (DCF) Model : You'll need the FCFE (Free Cash Flow for Equity),
which is the amount of money that is returned to shareholders. Calculate an FCFF (Free Cash
Flow to the Firm): EBIT (1-tax rate) -Capital Expenditures+ (Depreciation & Amortization) -
(Net increase in working capital)= FCFF
FCFF-Debt+Cash=FCFE
Use the Capital Asset Pricing Model, not the Weighted Average Cost of Capital (for the same
reasons one uses Equity Multiples in relative valuation) to determine the cost of equity (the
return required by shareholders to make the decision to invest in a financial institutions)
Excess Return Model : A model where valuation is expressed as the sum of capital invested
currently in the firm and the present value of dollar excess returns that the firm expects to make
in the future.[1]
[EDITGGOVERNMENT] Governance
Governance is a critical issue for financial institutions as they operate in a substantially regulated
environment. Some of the key governing bodies are: In the United States: FFIEC, Comptroller of
the Currency- National Banks, FDIC-State "non-member" banks, NCUA-Credit Unions, Federal
Reserve- Fed "member" Banks, Office of Thrift Supervision - National Savings & Loan
Association, State governments each often regulate and charter financial institutions. In Norway,
Financial Supervisory Authority of Norway. In Hong Kong, Hong Kong Monetary Authority. In
Russia, Central Bank of Russia.

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Wikinews – Recent deaths – More current events...

Current events of 7 January 2010 (2010-01-07) (Thursday) edit history watch

• The United States approves arms sales to Taiwan, amid opposition from China. (Radio
Taiwan International) (BBC) (AFP)
• Aid agencies warn of renewed violence in Southern Sudan unless there are attempts to
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(Xinhua) (Khaleej Times)
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January 7, 2010 Wikinews articles

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their retirement
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Current events of 6 January 2010 (2010-01-06) (Wednesday) edit history watch

• Algerian US ambassador Abdellah Baali and Nigerian Information Minister Dora

Akunyili are upset at the decision of the United States to subject Algerians and Nigerians
to tougher than usual security tests at airports, saying it is "discrimination" and "risks
ties". Both have officially complained. (BBC)
• Extreme weather across Europe leads to dozens of deaths, including at least 122 in
Poland and at least 7 as a result of an avalanche in Switzerland. (BBC)
• At least 25 people are killed and at least three others are trapped in a mine fire in
 Xiangtan County in Hunan. (Xinhua) (Reuters Africa) (Press TV) (Times of India)
• Iris Robinson, the wife of Northern Ireland's First Minister, admits having previously
attempted suicide. Her husband Peter Robinson gives an emotional interview in which he
speaks of being "deeply hurt" after learning of her extramarital affair. (BBC) (RTÉ)
(RTÉ)
• Yemen arrests three suspected Al-Qaeda members, including one leader, northwest of
the capital Sana'a. (Yemen News Agency) (AFP)
• 50-year-old Chinese journalist Li Junqi is imprisoned for 16 years after accepting bribes
for his part in a mass three-month cover-up of a coal mine disaster in Hebei in which 35
people, including a rescue worker, were killed prior to the 2008 Summer Olympics in
Beijing. (China Daily) (Press Trust of India)
• The Dauletabad – Salyp Yar gas pipeline between Turkmenistan and Iran is opened.
(Press TV) (Channel News Asia)
• Anti-whaling activists accuse a Japanese vessel of sinking their protest boat during a
confrontation in the Southern Ocean. (euronews) (AFP)
• Three soldiers are killed and 11 wounded in a bomb attack in Pakistan-administered
Kashmir. (Press Trust of India) (Associated Press of Pakistan) (Xinhua)
• At least six police officers are killed and another 16 injured in a suicide car bomb attack
in Dagestan, southern Russia. (Al Jazeera) (RIA Novosti) (BBC)
• Palestinians kill an Egyptian border guard and 50 people are injured in clashes between
pro-Palestinian activists and Egyptian police as a Viva Palestina convoy nears the border
with Gaza. (BBC) (Jerusalem Post)
• Japanese Finance Minister Hirohisa Fujii resigns at the age of 77 due to ill health. (BBC)
(Kyodo)
• The U.S. government lowers the threshold for information deemed important enough to
put suspicious individuals on a watch list or no-fly list, or have their visa revoked.
(CNN)
• China becomes the largest exporting country, pushing Germany from first place. (The
Wall Street Journal)
• Ex-Cabinet Ministers Geoff Hoon and Patricia Hewitt call for a secret ballot to settle the
debate over the leadership of the Labour Party of British Prime Minister Gordon Brown.
(BBC)
• China's tourism revenue hits USD 185 billion in 2009. (Xinhua)
• Computer scientist Fabrice Bellard claims he has computed π to almost 2.7 trillion digits.
(BBC) (The Times of India) (The Daily Telegraph)

January 6, 2010 Wikinews articles

• Wikinews Shorts: January 6, 2010

• No debt yet: Iceland's President vetoes repayment of Icesave losses
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• Croatian ruling party expels ex-PM from membership
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Current events of 5 January 2010 (2010-01-05) (Tuesday) edit history watch

• As many as 1,000 people in the Solomon Islands are reportedly homeless following the
two major earthquakes and tsunami which struck the country earlier this week. (Time
Magazine)
• At least seven people are killed and 20 missing after a bridge collapse in the Brazilian
state of Rio Grande do Sul. (Latin American Herald Tribune) (China Daily) (IOL)
• The Yemeni government launches campaigns in three provinces to battle Al-Qaeda
fighters. (Al Jazeera) (Times of India)
• Slovakia admits responsibility for a major bomb alert on Dorset Street in Dublin,
Ireland, after planting explosives on a civilian as a test. (RTÉ) (The Belfast Telegraph)
(BBC)
• Iran bans its citizens from contact with 60 international organisations and media outlets
over claims they conspired against the country. (Press TV) (Global Times) (The Times)
• The President of Iceland Ólafur Ragnar Grímsson announces a referendum during a live
televised speech. (BBC) (RTÉ) (Iceland Review)
• Facebook blocks a social network suicide website. (France 24) (The Guardian) (IOL)
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November, pleads not guilty at the beginning of his trial in the Philippines. (Philippine
Inquirer) (CNN) (AFP)
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Yar'Adua who has been at a hospital in Saudi Arabia for six weeks. (BBC) (Nigeria
Guardian) (Afrique en ligne)
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dinner for the Prime Minister of India. (Reuters)(Associated Press)
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(BBC)
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 • A Learjet cargo plane on approach to Chicago Executive Airport crashes into the Des
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January 5, 2010 Wikinews articles

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Current events of 4 January 2010 (2010-01-04) (Monday) edit history watch

• Johan Ferrier, first President of Suriname and the world's oldest living former head of
state, dies in the Netherlands at the age of 99. (Radio Netherlands Worldwide)
(Winnipeg Free Press)
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(New Scientist)
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police. (BBC)(Las Vegas Sun)
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completely locked down. (BBC) (The Sydney Morning Herald)
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January 4, 2010 Wikinews articles

• US, UK embassies in Yemen close due to al-Qaeda threat

Current events of 3 January 2010 (2010-01-03) (Sunday) edit history watch

• A 5.1 magnitude earthquake leaves 20,000 homeless and causes US$1.5 million in
damage in eastern Tajikistan. (CNN) (UPI) (RIA Novosti)
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and two nuclear power stations are intended to be shut down as a precaution. (BBC)
• The Eritrean military claims at least 10 Ethiopian soldiers were killed and 2 captured
when Ethiopia launched an armed incursion into Eritrea. The Ethiopian military claims
25 Eritrean soldiers were killed while attacking Ethiopian positions. (TVNZ) (AFP)
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Mareeb. (BBC) (Gulf Times)
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(BBC) (UPI)
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researchers. (The Independent) (BBC) (AFP)
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Australia. (ABC News Australia) (BBC)
• The United States and United Kingdom close their embassies in Yemen, citing threats
from Al-Qaeda. (CNN) (euronews)
• The Supreme Court of Peru upholds a 25 year prison sentence for former President
Alberto Fujimori, convicted of mass human rights violations. (Andina) (AFP) (RTT
News)
• Mexican police arrest alleged drug lord Carlos Beltrán Leyva in Culiacán, Sinaloa. (The
Guardian) (People's Daily) (CNN)
 • Japan doubles a state-sponsored credit line to troubled airline Japan Airlines to Y200bn
(US$2.2bn). (Financial Times) (AFP)
• Hundreds of people attempt to control a large diesel leak into a major tributary of the
Yellow River, the Wei River, in Shaanxi, China. (Al Jazeera) (AFP) (China Daily)
• Two trains collide near the city of Bilecik in northwestern Turkey, killing one and
injuring at least four others. (Hürriyet) (CNN)
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complaint against the BBC regarding how much more difficult it is to have her scripts
commissioned than it would be for a "little Muslim boy". (The Independent) (Scotland
on Sunday)
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police and drug traffickers in Khorosan. (BBC) (INO News) (Islamic Republic News
Agency)
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(Colombia Reports) (TVNZ)
• Mount Nyamuragira in the Democratic Republic of the Congo erupts, threatening rare
wildlife in the Virunga National Park. (France 24) (BBC)
• British Prime Minister Gordon Brown announces that full body scanners will be
introduced at UK airports following the failed attack on Northwest Airlines Flight 253
on Christmas Day. (BBC)

January 3, 2010 Wikinews articles

• Magnitude 6.5 earthquake rocks the Solomon Islands

• New year introduces Illinois texting while driving ban, among other laws
• Nearly 25% of Iceland's voters petition for veto of Icesave bill
• US jobless claims fall, reach seventeen-month low
• US researchers increase tobacco's oil production for biofuel use
• NHL: Boston Bruins win Winter Classic in overtime
• Volcano erupts in Democratic Republic of Congo
• Death toll from Brazil mudslides rises to sixty

Current events of 2 January 2010 (2010-01-02) (Saturday) edit history watch

• A quarter of voters in Iceland sign a petition asking President Ólafur Ragnar Grímsson to
veto a bill on repaying US$5 billion to foreign savers who lost their money when
Icelandic banks collapsed. (ABC News) (Iceland Review)
• The Ugandan army announces it has killed Bok Abudema, a senior member of the Lord's
Resistance Army, in the Central African Republic. (AFP) (BBC)
• The Afghan Parliament rejects 17 out of 24 cabinet nominees proposed by President
 Hamid Karzai. (The Daily Telegraph) (Hürriyet) (Al Jazeera)
• Somali pirates seize an Indonesian chemical tanker with 24 crew in the Gulf of Aden and
a British cargo ship with 26 cars 620 miles off the Horn of Africa. (Times of India) (RTT
News) (BBC)
• The Israeli Air Force launches an attack against tunnels leading from Gaza into Israel in
response to missile attacks and mortar fire. (Haaretz) (Al Jazeera)
• 19-year-old Norwegian chess grandmaster Magnus Carlsen is confirmed as the
youngest-ever world number one in the official January 2010 FIDE rating list. (Reuters)
(TIME) (AFP) (Chessbase)
• An Antarctic expedition finds remains of the first aeroplane brought to the continent, a
single-propeller Vickers plane of explorer Douglas Mawson. (Reuters)
• Atheist Ireland purposefully publishes the words of Jesus Christ, Muhammad, Salman
Rushdie, Mark Twain and Pope Benedict XVI on its website despite a new law banning
them on grounds of blasphemy. (BBC) (CNN) (Irish Times)
• Police in Denmark shoot a 28-year-old male Somali after he breaks into the Viby J home
of Kurt Westergaard, the cartoonist at the centre of the Jyllands-Posten Muhammad
cartoons controversy in 2005, and threatens his family with an axe. (BBC) (The Times)
(Sky News)

January 2, 2010 Wikinews articles

• Afghanistan's parliament rejects Karzai's cabinet nominations

• UK Wikinews Shorts: January 2, 2010
• Illinois high school girls basketball: Immaculate Conception defeats Wheaton Academy,
wins Lisle tournament
• Remains of 1912 expedition plane found in Antarctica
• Somali man attempts failed attack on controversial cartoonist
• North Korea seeks diplomatic relations with the US
• At least 75 dead following suicide bombing in Pakistan; scores more wounded
• China to surpass Japan to become second largest economy
• Russia raises minimum vodka prices

Current events of 1 January 2010 (2010-01-01) (Friday) edit history watch

• At least 18 FARC rebels are killed while celebrating the New Year in an air raid by the
Colombian Air Force in the south of the country. (Latin American Herald Tribune) (Al
Jazeera)
• A study suggests that teenagers who go to bed late are more likely to develop depression
and to have suicidal thoughts. (BBC News) (CBC) (Sleep)
• 2010 Lakki Marwat suicide bombing: At least 95 people are killed, more than 100 more
 are injured and 20 houses are destroyed after a suicide bomber blows himself up at a
volleyball game in Lakki Marwat, northwest Pakistan. (The Times) (Express India) (BBC
News)
• At least 19 people are dead and five are injured as mudslide hits an island resort near
Angra dos Reis, Ilha Grande. Large numbers also killed elsewhere in Brazil. (BBC) (The
Washington Post)
• Researchers announce that the likely origin of devil facial tumour disease, a
transmissible cancer which has caused the population of Tasmanian devils to collapse by
60% in the past decade, is Schwann cells. (BBC) (Time) (New York Times) (Science)
• A Cambodian court issues an arrest warrant for opposition leader Sam Rainsy, for failing
to turn up at court over a border dispute with Vietnam. (BBC) (Phnom Penh Post)
• North Korea calls for the end of hostilities with the United States and a nuclear free
Korean Peninsula, to restart talks; in its annual New Year editorial. (Yonhap) (CNN) (Al
Jazeera)
• Spain takes over the Presidency of the Council of the European Union from Sweden.
(BBC News) (Deutsche Welle) (euronews)
• Russians are surprised by a cartoon "gently lampooning" Dmitry Medvedev and
Vladimir Putin who are portrayed dancing, singing and playing musical instruments.
(BBC) (France 24)
• China and the Association of Southeast Asian Nations (ASEAN) launch a Free Trade
Area. (New York Times) (Xinhua)
• David Tennant's last Doctor Who episode The End of Time aired at BBC One 6:40 pm
GMT

January 1, 2010 Wikinews articles

• Afghanistan: two kidnapped French journalists believed to be in good health

• At least eighteen dead after storms in Brazil