CHAPTER 8

FINANCIAL SYSTEMS
WRITTEN REPORT

Group 4
Mercado, Eize Ernest
Macarilay, Gracelle
Quebral, Kesley Andrei
Tuazon, Cathleen Drew
Introduction
Most transactions use cash and near-cash as they are generally more efficient in doing
transactions than Barter System. Nowadays, it moves around electronically, as it is
more secure than physical money.
It includes:
Measurement of value of things
Medium of exchange
Stored Value and unit of account

Financial Assets Real Assets

▪ Stocks ▪ Real Estate

▪ Bonds ▪ Commodity
▪ Currencies
▪ Commodity
▪ Cryptocurrency

2 Main Players
1. Lenders - people who lend money to financial institutions, believing that the money has the
potential to grow.

2. Borrowers- person or institution that receives money or other assets from a lender and agrees
to repay the loan with interest over a specified period.

Examples of financial Institutions

▪ Philippine Stock Exchange (PSE)
▪ Bangko Sentral ng Pilipinas (BSP)
▪ Securities and Exchange Commission (SEC)
Financial Systems in Economic Development
▪ Flourish Savings and Investment Relationship- the existence of a lively financial
system in one country provides facilities for individual and firm savings.
▪ Develop Labor and Employment- more manufacturing companies can boost their
working capital, thereby, they are able to employ more individuals for their
production.
▪ Growth in Capital and Securities Markets- capital markets issue debenture and
shares to public and other fund institutions that are expecting good returns from
their fixed capital or fixed assets like machinery and equipment.
▪ Trade Development- advanced business, both domestically and internationally,
allows capital goods to be sold through hire purchase and installment schemes.
▪ Infrastructure and Technology Development- Countries that are not dependent on
natural resources such as oil and gas, financial institutions allow financial prosperity
by the governments.
▪ Uphold Fiscal Policy- the existence of a worthy financial system in one country helps
in the control of inflation, recession, and even depression through a sound policy on
finance.
▪ Attract Foreign Investment- vigorous financial systems in one economy entice
potential investors in various sectors and provide more production opportunities and
investment prospects that can lead to economic growth and development.
▪ Foster Economic Integration- in the inevitable integration of countries in proximal
distances or regions, forming economic integration tends to have a common
investment, trade practice, and even legislation.
▪ Balance Regional Development- Provide various concessions and stock ownership
plants (SOPs) that eventually help avoid political risks in region.
▪ Sustain Macroeconomics Balance- Having a good financial system allows balance in
the industrial, agriculture, and service sectors, ensuring that contributors to the
national income benefit from the financial resources.