Financial Markets

A financial market is the place where financial assets are created or transferred. It can be broadly
categorized into money markets and capital markets. Money market handles short-term financial assets
(less than a year) whereas capital markets take care of those financial assets that have maturity period
of more than a year. 

1. Non-Bank Financial Institution These are other financial institutions which engage in specific
functions. They provide services related to claims, financial information, and advice, manage
porfolios of financial assets on behalf of other economic units, buy and sell claims on institution
from clients, and assist in finding sources for those economic units seeking loans. These either
private or government non-bank financial institution. Private Non-Bank Institutions

1. Investment House/Banks. The term “investment house” is defined to mean as “any enterprise” which
engages in the underwriting of securities of other corporations “. Underwriting is the act or process of
guaranteeing the distribution and sale of securities of any kind issued by another corporation. Securites
are written evidences of ownership, interest, or participation in any enterprise, or written evidences of
indebtesness of a person or enterprise.

2. 8. 2. Securities Brokers/dealers. Pursuant to hte provision of the Revised Securities Act, no
broker, dealer, or salesman must engage in business in the Philippines as such broker, dealer, or
salesman or sell any securities, including securities exempted under the said law.

3. 3. Building and Loan Associations. A building and loan association is a special type of savings
institution. Because of its very nature, however, it falls under this category in view of the fact
that it also receives savings from members and lends fund to them.

4. 4. Credit Unions. A credit unions is another type of savings institutions. It also has for its purpose
the inculcation of the habit of thrift, frugality, and the idea of helping one another. 5. Private
Insurance. Private insurance companies contribute to the contry’s socio- economic development
as well as to the insured.

5. 9. 6. The Pawnshop. Pawnshop provides credit to small borrowers who are not qualified to
obtain small loans from financial institution. In pawnshop, the cost of borrowing and terms of
payment are generally fair.

6. 7. Trust Companies. A trust company is any corporation formed or organized for the purpose of
acting as trustee or administering any trust or holding property or on deposit for the use.
Benefit, or behoof of others.

7. 8. Non-Stock Savings and Loans Association. A non-stock savings and loans associations is a
corporation engaged in the business of accumulating the savings of its member.

8. 9. Financing Companies. Financing companies or partneships, except those regulated by the

Bangko Sentral, the Insurance Commisioner, and the Cooperative Administration Office which
 are primarily organized for the purpose of extending credit facilities to consumer and to
industrial, commercial, or agricultural enterprises.

9. 10. Other Non-Bank Financial Institutions. These are financial institution that are unknown to
many people. Fund managers, lending investor, and venture capital corporations are among
these institution.

10.

Government Non-Financial Institution

1. The Government Service Insurance System. On May 13 May 1937, thew Government Service
Insurance System (GSIS) started its operation. Presently, the GSIS administers the following: Life
Insurance Fund, Retirement Fund, Health Insurance Fund/Medicine, State Insurance Fund/Employees’
Compensation, General Insurance Fund/Property Insurance, and Barangay Officials’ Life Insurance.

2. The Social Security System. On 1 September 1957, the Social Security System (SSS) started its
operation. At first SSS granted only death, disability, sickness, and old-age benefits under its social
security program for the workers/employees in the private sectors. As its capacity the funding and
administrative experience grew, other benefits have added to the program such as hospitalization
benefits under the Medicare program, employees’ compensation benefits, and maternity benefits

3. Philippine Export and Foreign Loan Guarantee Corporation. The Presidential Decree No. 1080
entrusts the Philippine Export and Foreign Loan Guarantee Corporation (PEFLGC) to undertake the
following:

• To guarantee approved foreign loans, in whole or in part, granted to any domestic entity, enterprise,
or corporation, majority of the capital of which is owned by citizen of the Philippines.

• To guarantee Philippine banking and financial institutions against loss that may be incurred in
connection with:

1. The grant of loans/credit accomodations to exporters, producers of export products, or contractors

with approved service contactors abroad, provided that such exporters, producers or service contractors
are Filipinos or entities majority of the capital of which are owned by citizens of the philippines; and

2. the inssuance of standby letters of credit or of letters of guarantee, as the case may be, to secure the
performance of approved service contracts abroad entered into by any domestic entity, enterprise, or
corporation, majority of the capital of which are owned by citizen of the Philippines.

4. The National Home Mortrage Finance Corportation. The National Home Mortrage Finance
Corporation’s (NHMFC) primary purpose is to develop and provide a secondary market for home
mortrages granted by public and/ or private home financing institutions. Under Section 5 of Presidential
Decree No. 1267, the NHMCF is authorized to exercise the following powers and functions:
 • To purchase, acquire, sell, discount, refinance, or otherwise deal in home mortrages or participations
therein under such terms and conditions as may be prescribed by the Board of Directors of the
corporations.

• To borrow funds from domestic or foreign private or public financial institutions as may from time to
time be required for its operations, and to issue bonds, promissory notes debentures, and other debt
instuments in local or foreign currency.

• To own, lease, purchase or otherwise acquire, sell or otherwise dispose of property, real or personal
as may be necessary and appropriate for the conduct of its business.

• To invest funds or monies of the corporations not invested in mortrage loans in securities issued by
the national government, Bangko Sentral and other

government entities, including government-owned and controlled corporations, the servicing and
repayment of which are fully guaranteed by the Republic of the Philippines.

• To enter into and perform such contracts with any person or entity, public or private, as may be
necessary, proper, or conductive to the attainment or furtherance of the objectives and purposes of the
corporations.

• To adopt, alter, and use a corporate seal; to sue and be sued; and generally, to exercise all the powers
of a corporation under the Corporation Code of the Philippines which are not inconsistent with P.D
1267.

• To promulgate such rules and regulations and to perform any and all things as may be necessary and
proper to carry out its responsibilities, powers, and function under P.D No. 1267.

1. The Government Service Insurance System. On May 13 May 1937, thew Presently,

2. The Social Security System. On 1 September 1957, the Social Security System (SSS) started its
operation. At first SSS granted only death, disability, sickness, and old-age benefits under its social
security program for the workers/employees in the private sectors. As its capacity the funding and
administrative experience grew, other benefits have added to the program such as hospitalization
benefits under the Medicare program, employees’ compensation benefits, and maternity benefits

3. Philippine Export and Foreign Loan Guarantee Corporation. The Presidential Decree No. 1080
entrusts the Philippine Export and Foreign Loan Guarantee Corporation (PEFLGC) to undertake the
following:

• To guarantee approved foreign loans, in whole or in part, granted to any domestic entity, enterprise,
or corporation, majority of the capital of which is owned by citizen of the Philippines.

• To guarantee Philippine banking and financial institutions against loss that may be incurred in
connection with:
1. The grant of loans/credit accomodations to exporters, producers of export products, or contractors
with approved service contactors abroad, provided that such exporters, producers or service contractors
are Filipinos or entities majority of the capital of which are owned by citizens of the philippines; and

2. the inssuance of standby letters of credit or of letters of guarantee, as the case may be, to secure the
performance of approved service contracts abroad entered into by any domestic entity, enterprise, or
corporation, majority of the capital of which are owned by citizen of the Philippines.

4. The National Home Mortrage Finance Corportation. The National Home Mortrage Finance
Corporation’s (NHMFC) primary purpose is to develop and provide a secondary market for home
mortrages granted by public and/ or private home financing institutions. Under Section 5 of Presidential
Decree No. 1267, the NHMCF is authorized to exercise the following powers and functions:

• To purchase, acquire, sell, discount, refinance, or otherwise deal in home mortrages or participations
therein under such terms and conditions as may be prescribed by the Board of Directors of the
corporations.

• To borrow funds from domestic or foreign private or public financial institutions as may from time to
time be required for its operations, and to issue bonds, promissory notes debentures, and other debt
instuments in local or foreign currency.

• To own, lease, purchase or otherwise acquire, sell or otherwise dispose of property, real or personal
as may be necessary and appropriate for the conduct of its business.

• To invest funds or monies of the corporations not invested in mortrage loans in securities issued by
the national government, Bangko Sentral and other government entities, including government-owned
and controlled corporations, the servicing and repayment of which are fully guaranteed by the Republic
of the Philippines.

• To enter into and perform such contracts with any person or entity, public or private, as may be
necessary, proper, or conductive to the attainment or furtherance of the objectives and purposes of the
corporations.

• To adopt, alter, and use a corporate seal; to sue and be sued; and generally, to exercise all the powers
of a corporation under the Corporation Code of the Philippines which are not inconsistent with P.D
1267.

• To promulgate such rules and regulations and to perform any and all things as may be necessary and
proper to carry out its responsibilities, powers, and function under P.D No. 1267.

The financial structure comprises the Monetary Authorities (Central Bank of the Philippines and the
Ministry of Finance), 32 commercial banks, 931 rural banks, 10 savings banks, 37 development banks, 72
stock savings and loans associations, 250 finance companies, 12 investment houses, 59 investment
companies, 448 pawnshops, and various specialised financial institutions (Table 7.1 and Appendix 4).
Some of the financial institutions are government- or semi-government-owned, e.g. the Philippine
National Bank, the Philippine Veterans Bank, the Development Bank of Philippines, Land Bank, Philippine
Amanah Bank, and the specialised, non-bank institutions. The public sector plays an important part in
the financial system in terms of the share of Government financial institutions’ assets to the total assets
of the financial system and the share of Government financial institutions’ lending to the total.

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The IMF oversees the world's monetary system's stability, while the World Bank aims to reduce poverty

by offering assistance to middle-income and low-income countries. ... The World Bank accomplishes its
goals through technical and financial support available to countries.

The purposes of the International Monetary Fund are as follows:

1. To promote international monetary cooperation through a permanent institution which

provides the machinery for consultation and collaboration on international monetary problems.

2. To facilitate the expansion and balanced growth of international trade, and to contribute
thereby to the promotion and maintenance of high levels of employment and real income and
to the development of the productive resources of all members as primary objectives of
economic policy.

3. To promote exchange stability, to maintain orderly exchange arrangements among members,

and to avoid competitive exchange depreciation.

4. To assist in the establishment of a multilateral system of payments in respect of current

transactions between members and in the elimination of foreign exchange restrictions which
hamper the growth of world trade.

5. To give confidence to members by making the general resources of the Fund temporarily
available to them under adequate safeguards, thus providing them with opportunity to correct
maladjustments in their balance of payments without resorting to measures destructive of
national or international prosperity.

6. In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in
the international balances of payments of members.“Articles of Agreement: Article I—
Purposes,” International Monetary Fund, accessed May 23, 2011,

7. IMF also provides member countries with technical assistance to create and implement effective
policies, particularly economic, monetary, and banking policy and regulations.

The IMF supports many developing nations by helping them overcome monetary challenges and to
maintain a stable international financial system. 

 the IMF has played a role in helping countries avert widespread financial disasters. 
The IMF is playing an expanding role in the global monetary system. The IMF’s key roles are the
following:

 To promote international monetary cooperation

 To facilitate the expansion and balanced growth of international trade

 To promote exchange stability

 To assist in the establishment of a multilateral system of payments

 To give confidence to members by making the IMF’s general resources temporarily available to
them under adequate safeguards

 To shorten the duration and lessen the degree of disequilibrium in the international balances of
payments of members