lOMoARcPSD| 50032646
UNIVERSITY OF ECONOMICS BANKING FACULTY
FINANCIAL MARKETS AND INSTITUTIONS
THE WAYS FINANCIAL INSTITUTIONS HELP
FINANCIAL MARKETS TO WORK Group : 1 Class : 48K07.1 Student : Đoan Phan Minh Chau Bui Tran Anh Vy Tu Bao Chau Lecturer : Ph.D Phan Dang My Phương
Đà Nẵng, November 12th, 2023 lOMoARcPSD| 50032646 TABLE OF CONTENTS
CHAPTER 1: OVERVIEW ...................................................................................................................... 1
1.1 Financial markets .................................................................................................................. 1
1.2 Financial institutions ............................................................................................................. 2
CHAPTER 2: SCENARIO SUMMARY .................................................................................................. 2
CHAPTER 3: REASON FOR CHOOSING THE SCENARIO ............................................................... 3
CHAPTER 4: Answer the question ........................................................................................................... 3
CONTRIBUTION RATES OF MEMBERS ............................................................................................. 4 CHAPTER 1: OVERVIEW 1.1 Financial markets Concept: The financial
market is a market for trading financial assets such as stocks, bonds, bills, etc. Participants in transactions in the financial
market include households, businesses, and financial institutions. Intermediary financial
institutions and governments are participants in buying and selling commodity financial
assets of the financial market. Role :
Mobilizing capital: The financial market is a place that provides capital to economic
entities, including individuals, businesses and governments. Through the financial market,
economic entities can access the necessary capital for production, business, investment and consumption activities.
Capital allocation: Financial markets help allocate capital effectively from subjects with
idle capital to subjects with capital needs. This helps promote economic growth and
improve capital use efficiency.
Economic regulation: Financial markets help regulate the economy through tools such as
interest rates, exchange rates, etc. For example, when interest rates increase, investment
demand decreases, thereby helping to reduce inflationary.
Providing information: Financial markets provide information about prices, interest rates,
exchange rates, etc. to economic entities. This information helps economic actors make
more effective economic decisions. 1 lOMoARcPSD| 50032646
1.2 Financial institutions
a) Concept: a financial institution is an organization that can carry out one or more business
activities, including lending, receiving deposits, leasing finance, transferring money or value;
financial guarantees and commitments; issuance and management of payment instruments;
Participate in issuing securities;... b) Role: •
Controlling the money supply in the economy: ensuring the smooth transfer of money
from investors to businesses, supporting control and maintaining the stability of cash flow in the economy. •
Limit risks for investors: thanks to the diversification of financial institutions, many
products and services have been created to help money be allocated to many different assets
and investments which is safer. •
Save transaction costs. •
Create effective payment mechanisms: Especially commercial banks, help the market
operate more quickly and efficiently, while helping reduce time and risks in payments and transactions.
c) Financial institutions according to the provisions of law • Central bank • Commercial Bank • Credit Union •
Banks and investment companies • Brokerage company • Insurance company • Savings and Loan Association
CHAPTER 2: SCENARIO SUMMARY
Mrs. A is a business woman who owns a cafe chain and wants to expand her assets through
participating in the real estate sector. So she started to learn about land and went to CNV
brokerage company. Then the company assigned an employee to welcome her. Subsequently,
the employee began to take her to view numerous plots of land in potential locations. After a
few hours of viewing, she chose a suitable plot of land, because of not having enough money,
the staff advised her about taking a bank loan to buy land. Mrs. A agreed with this proposal so
the staff contacted the vendor (Mrs. B), scheduled an appointment to discuss with Mrs. A. The
following day, the two of them met each others to negotiate the price and draft a sales contract.
When both parties have signed a sales contract, Ms. A payed Ms. B according to the specified
contract terms. After full payment, Mrs. A and Mrs. B carried out the real estate handover. Mrs.
B handed over the house and land to Mrs. A in good condition, as agreed in the sale contract.
Once the real estate handover and receipt is completed, Mrs. A continues to carry out the
procedures for registering changes in land and assets attached to land at the competent state
agency which helps Mrs. A be granted a certificate of land use rights, ownership of houses and
other assets attached to land. lOMoARcPSD| 50032646
CHAPTER 3: REASON FOR CHOOSING THE SCENARIO
First, real estate is a highly valuable asset and the value of real estate can increase or decrease,
creating opportunities for investors to profit.
Second, real estate can be used to secure loans. Banks and other financial institutions may use
real estate as collateral for loans, such as home mortgages. This helps reduce risks for financial
institutions and makes it easier for individuals and businesses to access capital.
Finally real estate can be used to create financial products. Real estate bonds and real estate
investment trusts (REITs) are two examples of real estate-based financial products product.
These products allow investors to access the real estate market without having to buy real estate directly.
In this section we also mention banks, because through banks we borrow capital to buy and sell real estate.
The relationship between real estate and banking is expressed through the following aspects:
• Real estate mortgage: This is the most common type of loan that banks offer to
individuals and businesses. Mortgage loans are secured by real estate assets, such as
houses, land, buildings, etc. This helps reduce risks for banks in case the borrower fails to repay the loan.
• Real estate development loans: Banks also provide loans to real estate developers to build
residential, commercial and industrial projects. These loans help boost real estate supply and meet market demand.
• Real estate investment: Banks also participate in real estate investment directly or
indirectly through real estate investment funds (REITs). This helps banks diversify their
investment portfolios and increase profits.
In short, the relationship between real estate and banking is a close and close
relationship. The development of the real estate market will create opportunities
for banks to expand lending and investment activities. On the contrary, the
development of banks will help promote sustainable development of the real estate market.
CHAPTER 4: Answer the question
Financial institutions play a crucial role in the smooth functioning of financial markets. They
act as intermediaries between buyers and sellers of financial instruments, facilitating the flow of
capital and enabling the efficient allocation of resources. Here are some of the key ways
financial institutions help financial markets to work: 3 lOMoARcPSD| 50032646
1. Providing liquidity: Financial institutions, such as banks and brokerages, act as liquidity
providers, enabling investors to easily buy and sell financial instruments. This liquidity is
essential for efficient price discovery and market stability.
2. Reducing transaction costs: Financial institutions employ economies of scale and
expertise to reduce transaction costs for investors which makes it more affordable for
individuals and institutions to participate in financial markets.
3. Managing risk: Financial institutions use various techniques, such as hedging and
diversification, to manage risk for themselves and their clients which helps to mitigate
systemic risks, protect the stability of financial markets and allow investors to diversify their portfolio.
4. Collecting and disseminating information: Financial institutions collect and analyze vast
amounts of financial data. They then disseminate this information to investors, which helps
them make informed investment decisions.
5. Providing financial services: Financial institutions offer a wide range of services to
individuals, businesses, and governments, including investment banking, commercial
banking, and retail banking. These services support economic growth and development.
6. Providing capital for businesses and governments: Financial tools help businesses and
governments mobilize capital from investors which helps them finance their business or investment projects.
CONTRIBUTION RATES OF MEMBERS
• 1= Ít hoặc không có kinh nghiệm, năng lực làm việc dưới mức trung bình.
• 2= Có một số kỹ năng, kinh nghiệm, năng lực làm việc dưới mức trung bình.
• 3= Có kỹ năng, kinh nghiệm đáp ứng công việc ở mức năng lực trung bình.
• 4= Có kỹ năng, kinh nghiệm tốt, đáp ứng công việc ở mức năng lực khá.
• 5= Có kỹ năng, kinh nghiệm vượt trội, đáp ứng công việc ở mức năng lực xuất sắc. Đoàn Phan Minh Tên thành viên Từ Bảo Châu Bùi Trần Ánh Vy Châu Vị trí công việc Thành viên Nhóm trưởng Thành viên Mức độ nghiên cứu tài liệu 5 5 5 Phối hợp làm việc 5 5 5 nhóm Khả năng đóng góp ý kiến của thành viên đối với công 5 5 5 việc của nhóm Hoàn thành công việc được giao đúng 5 5 5 hạn lOMoARcPSD| 50032646 Tổng cộng 20 20 20 Phần trăm 100% 100% 100% 5