Classification of

Financial
Intermediaries
Jean Marie Alcala
Depository Institution
a place or entity — such as a bank
 allows consumers and businesses to deposit money, securities, and/or other types of
assets
 >the deposit is kept safely and may earn interest
 also can be an organization, bank, or institution that holds securities and assists in
the trading of securities. Deposits placed in a depository must be returned in the
same condition upon request.

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 How does it work?
 It can receive funds from consumers and businesses via:
 These institutions accept customers' money and
• Cash pay interest on their deposits over time. While
holding the customers' money, the institutions lend
• Direct deposit it to others in the form of mortgage or business
loans, generating more interest on the money
• Teller or ATM deposits loaned than the interest they paid to customers.

• Checks

• Electronic transfers

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Types of Depository Institutions
Commercial Bank
a kind of financial institution
that carries all the operations
related to deposit and
withdrawal of money for the
general public, providing
loans for investment, and
other such activities. These
banks are profit-making
institutions and do business
only to make a profit.
Thrift Bank
a type of financial institution
that specializes in offering
savings accounts and
originating home mortgages
for consumers. Thrift banks
are also sometimes referred
to as Savings and Loan
Associations (S&Ls).
Rural Bank
a private banking
institution that serves rural
areas that mobilizes and
manages financial resources
and provides loan to people
who want to have a
business but struggles in
capital
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Types of Types of Thrift Top Rural Banks in
Commercial Banks Banks the Philippines

1. BDO Network Bank

1. Private bank – It is a type of 1. Savings Bank - These banks
commercial bank where private generate funds from selling 2. East West Rural Bank

individuals and businesses own a savings to customers and 3. Card Bank

majority of the share capital. All
private banks are recorded as
companies with limited liability.
2. Public bank – It is a type of
bank that is nationalized, and the
government holds a significant
stake.
3. Foreign bank – These banks are
established in foreign countries and
have branches in other countries.
investing in mortgage loans. 4. SeaBank Philippines
2. Private Development Bank - 5. Guagua Rural Bank
These banks are formed to
support government policies.
3. Stock Savings and Loan
Associations - A locally or
privately managed financial
banking institution that takes long-
term deposits to provide
amortized home loans.

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Non-depository Institution

 Nondepository institutions include insurance companies, pension funds, securities firms,

government-sponsored enterprises, and finance companies. There are also smaller
nondepository institutions, such as pawnshops and venture capital firms, but they are much
smaller sources of funds for the economy.

 Any financial institution that acts as the middleman between two parties in a financial
transaction, and that does not provide traditional depository services, such as
brokerage firms, insurance companies, investment companies, etc.

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Insurance Companies

 Insurance companies are major suppliers of funds. Policyholders make payments

(called premiums) to buy financial protection from the insurance company.
Insurance companies invest the premiums in stocks, bonds, real estate, business
loans, and real estate loans for large projects.
 A company that creates insurance products to take on risks in return for the
payment of premiums. Companies may be mutual (owned by a group of
policyholders) or proprietary (owned by shareholders). (Also known as insurer or
provider).

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Insurance company ranking based
on net income
01 02 03
Sun Life PHILAM Life PRU Life

AXA Life Insular life

04 05

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Brokerage Firms
 buys and sells securities (stocks and bonds)
for its clients and gives them related advice
 a middleman who connects buyers and
sellers to complete a transaction for stock
shares, bonds, options, and other financial
instruments
Brokers are compensated in
commissions or fees that are charged
once the transaction has been completed.
Many brokerage firms offer some
banking services. They may offer clients
a combined checking and savings
account with a high interest rate and
make loans, backed by securities, to
them.
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Examples of Brokerage Firms:

• Alpha Securities Corp. (AlphaSec)

• BDO Securities Corp.
• BPI Securities Corp. (BPITrade)
• China Bank Securities Corp. (Chinabank Sec)
• COL Financial Group, Inc.
• First Metro Securities Brokerage Corp. (First Metro
Sec)
• Globalinks Securities & Stocks, Inc. (GTrade)
• Landbank Securities, Inc.
• Maybank Kim Eng (MaybankTrade)
• RCBC Securities, Inc. (RCBC ezTrade)
Finance Companies

 an organization that lends money to individuals and businesses. Unlike a

bank, a finance company does not receive cash deposits from clients.

 They make a profit from the interest rates they charge on their
loans, which are normally higher than banks charge their clients.

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Pawnshops

 a business who loansmoney to people who bring in valuable items which

they leave with the pawnbroker

 Examples of items that a person may leave are jewelry, gold, and watches.
Pawnshops make money by providing personal loans, reselling retail items,
and offering auxiliary services, such as money transfers
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Examples of Pawnshop:

• Cebuana Lhuillier
• Palawan Pawnshop
• Villarica Pawnshop
• M Lhuillier
• Tambunting
• Raquel Pawnshop
Trust Companies
 a legal entity that acts as a fiduciary, agent, or trustee on behalf of a person or
business for the purpose of administration, management, and the eventual
transfer of assets to a beneficial party.
 The trust company acts as a custodian for trusts, estates, custodial arrangements,
asset management, stock transfer, beneficial ownership registration, and other
related arrangements.
 Trusts are managed for profit, which it may take out of the assets annually or upon
transfer to the beneficial third party.

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Lending Investors
 finds people with money and matches them with people who
need money and are willing to pay a certain rate of interest for
it. Unlike banks or credit unions, these investors perform only
one specific task: they lend money for profit.

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Fund Managers
 responsible for implementing a fund's investing strategy
and managing its portfolio trading activities. The fund can
be managed by one person, by two people as co-
managers, or by a team of three or more people.
 They can be found working in fund management with
mutual funds, pension funds, trust funds, and hedge
funds.

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Resources:
https://www.investopedia.com/terms/d/depository.asp

https://thismatter.com/money/banking/nondepository-institutions.htm#:~:text=Nonde
pository%20institutions%20include%20insurance%20companies,of%20funds%20for
%20the%20economy
.

https://www.abi.org.uk/data-and-resources/tools-and-resources/glossary/insurance-co
mpany/#:~:text=A%20company%20that%20creates%20insurance,known%20as%20i
nsurer%20or%20provider
).

https://www.investopedia.com/terms/f/fundmanager.asp
https://pressbooks.senecacollege.ca/introbusiness/chapter/__unknown__-4/
https://www.encyclopedia.com/finance/encyclopedias-almanacs-transcripts-and-
maps/finance-company 17
Thank you