Financial markets and institution.ppt

1、Chapter 2: Financial Markets and Institutions,1,Objective Understanding the workings of the financial system Determining rates of return,Chapter 2 Contents,2.1 What is a Financial System? 2.2 The Flow of Funds 2.3 The Functional Perspective 2.4 Financial Innovation & the “Invisible Hand” 2.5 Financi

2、al Markets 2.6 Financial Market Rates 2.7 Financial Intermediaries 2.8 Financial Infrastructure and Regulation 2.9 Governmental & Quasi-Governmental Organizations,2,The Financial System,Financial decisions are made within the context of a financial system The financial system both constrains and ena

3、bles the decision maker This chapter provides a framework for understanding how financial systems work,3,2.1 What is the Financial System?,A Financial System is comprised of markets, intermediaries, service firms and other institutions used to carry out the financial decisions of households, busines

4、s firms, and governments,4,Geography of the Markets,some markets for a particular market instrument may have a well defined geographic location such as the New York Stock Exchange or the Shanghai Stock Exchange other market instruments are traded on over-the-counter or off-exchange markets for bonds

5、, stocks, and foreign exchange,5,2.2 The Flow of Funds,6,Funds may flow from the surplus unit to the deficit unit Directly Through markets Through intermediaries,The Flow of Funds Diagram,7,Markets,Intermediaries,Surplus Units,Deficit Units,The Flow of Funds Diagram,We shall examine various pathways

6、 from the surplus unit to the deficit unit 金融就是“资金的融通”，对吗？ 直接融资与间接融资,8,Fund Flows via Market,9,Markets,Intermediaries,Surplus Units,Deficit Units,Fund Flows via Intermediary,10,Markets,Intermediaries,Surplus Units,Deficit Units,Fund Flows via Intermediary and Market,11,Markets,Intermediaries,Surplus

7、 Units,Deficit Units,Quick test,An depositor put 5000 Yuan into ABC, and you got a 5000 student loan from ABC, which graph can you category this cash flow process?,12,2.3 Functional Perspective,Six Key Financial Functions: Transferring Resources Across Time & Space Managing Risk Clearing and Settlin

8、g Payments Pooling Resources and Subdividing Shares Providing Information Dealing with Incentive Problems,13,Transferring Resources Across Time and Space,A financial system provides ways to transfer economic resources through time, across geographic regions, and amongst industries A Dutch household

9、currently has excess funds needed in ten years A Chinese business would become more profitable with new investment funds Financial markets make this match 能否再举出一些通过金融市场跨期跨空间配置资源的例子？,14,Managing Risk,Future flows have associated risks. But risks could be unbundle and repackaged by a financial system

10、using portfolios, financial derivatives, and guarantees Many financial contracts target risks rather than flows 举一个你通过金融产品管理风险的例子 金融的核心含义:deal with uncertainty,15,Managing Risk,A fund manager may increases risk (and expected returns) of a fund by issuing bonds secured against the funds assets, writi

11、ng put options, buying call options, and going “long” market index futures Another fund manager may decrease risk by investing in the money market, put options, and short index futures,16,Clearing and Settling Payments,A financial system provides ways of clearing and settling payments to facilitate

12、the exchange of goods, services, and assets,17,Pooling Resources and Dividing Ownership in Large Assets,A financial system provides a mechanism for the pooling of funds to undertake large-scale indivisible enterprise or for the subdividing of shares in large enterprises with many owners,18,Pooling R

13、esources and Dividing Ownership in Large Assets,T-bills have a minimum face value of $10,000, but have very low risk (Solution: money market mutual fund) Developing a promising technology would expose a single firm to too much capital risk (Solution: joint venture) A household wishes to divest itsel

14、f of its ownership in a chain of restaurants (Solution: Form a corporation, and sell its stock) 例：余额宝,19,Providing Information,A financial system provides price information that helps coordinate decentralized decision-making in various sectors of the economy Investors need current prices to evaluate

15、 their portfolios of quoted securities Quoted prices may be used to estimate the value of similar non-quoted securities,20,Dealing with Incentive Problems,A financial system provides ways to deal with the incentive problems that occur when one party to a financial transaction has information that th

16、e other party does not, or when one party is an agent and makes decisions for another,21,Moral Hazard,A situation in which having insurance against some risk causes the insured party to take greater risk or to take less care in preventing the event that gives rise to the loss 道德风险是道德败坏吗？,22,Adverse

17、Selection,A type of incentive problem in which those who purchase insurance against risk are more likely to be at risk than the general population.,23,Principal-Agent Problem,A situation arising when agents do not make the same decisions that the principals would have made if the principals knew wha

18、t the agents knew and were making the decisions themselves.,24,2.4 Financial Innovation & the “Invisible Hand”,Financial innovation occurs spontaneously from the individual actions of entrepreneurs and firms, and not from the actions of a central authority Adam Smith Example: Credit cards installment,25,2.5 Financial Markets: By Basic Financial Assets,Debt (Also called fixed income securities, Bonds and Loans) Fixed Income Instruments promising fixed future payments Equities (Common Stock/Shares) Residual claim on assets. Limited liability Derivatives (Options, Forwards, Futures) Securities t