Functions-and-Roles-of-the-Financial-System-in-the-Global-Economy课件讲义整理

MoneyandCapitalMarkets1ChapterEighthEditionFinancialInstitutionsandInstrumentsinaGlobalMarketplacePeterS.RoseMcGrawHill/IrwinSlidesbyYee-Tien(Ted)FuFunctionsandRolesoftheFinancialSystemintheGlobalEconomyMoneyandCapitalMarkets1Ch

LearningObjectives

Tounderstandthefunctionsperformedandtherolesplayedbythesystemoffinancialmarketsandinstitutionsintheglobaleconomy.Toexploreseveralkeytermsandconceptsofthemoneyandcapitalmarkets.Todiscoverhowimportantthefinancialsystemisinincreasingourstandardofliving,generatingnewjobs,andbuildingoursavingstomeettomorrow’sfinancialneeds.LearningObjectivesToundeIntroductionThefinancialsystemisthecollectionofmarkets,institutions,laws,regulations,andtechniquesthroughwhichbonds,stocks,andothersecuritiesaretraded,interestratesaredetermined,andfinancialservicesareproducedanddeliveredaroundtheworld.IntroductionThefinancialsystIntroductionTheprimarytaskofthefinancialsystemistomovescarceloanablefundsfromthosewhosavetothosewhoborrowtobuygoodsandservicesandtomakeinvestmentsinnewequipmentandfacilities,sothattheglobaleconomycangrowandthestandardoflivingcanincrease.IntroductionTheprimarytaskoFlowswithintheGlobalEconomicSystemThebasicfunctionoftheeconomicsystemistoallocatescarceresources–land,labor,managementskill,andcapital–toproducethegoodsandservicesneededbysociety.Theglobaleconomygeneratesaflowofproductioninreturnforaflowofpayments.Thecircularflowofproductionandincomeisinterdependentandneverending.FlowswithintheGlobalEconomFlowswithintheGlobalEconomicSystemLandandothernaturalresourcesLaborandmanagerialskillsCapitalequipmentFlowofproductionFlowofpaymentsGoodsandservicessoldtothepublicFlowswithintheGlobalEconomFlowswithintheGlobalEconomicSystemProducingunits(mainlybusinessfirmsandgovernments)Consumingunits(mainlyhouseholds)Flowofproductionofgoods&servicesFlowofproductiveservicesFlowofexpendituresforconsumption&taxesFlowofincomesFlowswithintheGlobalEconomTheRoleofMarketsintheGlobalEconomicSystemInmosteconomiesaroundtheworld,marketscarryoutthecomplextaskofallocatingresourcesandproducinggoodsandservices.Themarketplacedetermineswhatgoodsandserviceswillbeproducedandinwhatquantitiesthroughtheirprices.Marketsalsodistributeincomebyrewardingsuperiorproducerswithincreasedprofits,higherwages,andothereconomicbenefits.TheRoleofMarketsintheGloTypesofMarketsThereareessentiallythreetypesofmarketswithintheglobaleconomicsystem.Thefactormarketsallocatethefactorsofproductiontotheownersofproductiveresources.Consumingunitsusemostoftheirincomefromfactormarketstopurchasegoodsandservicesinproductmarkets.TypesofMarketsThereareesseTypesofMarketsThefinancialmarketschannelsavingstothoseindividualsandinstitutionsneedingmorefundsforspendingthanareprovidedbytheircurrentincomes.TypesofMarketsThefinancialTypesofMarketsProducingunits(mainlybusinessfirmsandgovernments)FlowofproductionFlowofpaymentsConsumingunits(mainlyhouseholds)Flowoffunds(savings)Flowoffinancialservices,income,andfinancialclaimsFinancialmarketsProductmarketsFactormarketsFlowofincomesProductiveservices

GoodsandservicesFlowofpaymentsforconsumptionandtaxesFlowofincomesProductiveservicesTypesofMarketsProducingunitTheFinancialMarketsandtheFinancialSystem:

ChannelforSavingsandInvestmentThefinancialmarketsmakepossibletheexchangeofcurrentincomeforfutureincomeandthetransformationofsavingsintoinvestmentsothatproduction,employment,andincomecangrow.Thesuppliersoffundstothefinancialsystemcanexpectnotonlytorecovertheiroriginalfundsbutalsotoearnadditionalincomeasarewardforwaitingandforassumingrisk.TheFinancialMarketsandtheTheGlobalFinancialSystemDemandersoffunds(mainlybusinessfirmsandgovernments)Flowofloanablefunds(savings)Flowoffinancialservices,incomes,andfinancialclaimsSuppliersoffunds(mainlyhouseholds)TheGlobalFinancialSystemDemFunctionsPerformedbytheGlobalFinancialSystemandtheFinancialMarketsSavingsfunction.Theglobalsystemoffinancialmarketsandinstitutionsprovidesaconduitforthepublic’ssavings.Wealthfunction.Thefinancialinstrumentssoldinthemoneyandcapitalmarketsprovideanexcellentwaytostorewealth.Liquidityfunction.Financialmarketsprovideliquidityforsaverswhoholdfinancialinstrumentsbutareinneedofmoney.FunctionsPerformedbytheGloFunctionsPerformedbytheGlobalFinancialSystemandtheFinancialMarketsCreditfunction.Globalfinancialmarketsfurnishcredittofinanceconsumptionandinvestmentspending.Paymentsfunction.Theglobalfinancialsystemprovidesamechanismformakingpaymentsforgoodsandservices.FunctionsPerformedbytheGloFunctionsPerformedbytheGlobalFinancialSystemandtheFinancialMarketsRiskprotectionfunction.Thefinancialmarketsaroundtheworldofferbusinesses,consumers,andgovernmentsprotectionagainstlife,health,property,andincomerisks.Policyfunction.Thefinancialmarketsareachannelthroughwhichgovernmentsmayattempttostabilizetheeconomyandavoidinflation.FunctionsPerformedbytheGloTypesofFinancialMarkets

WithintheGlobalFinancialSystemThemoneymarketisforshort-term(oneyearorless)loans,whilethecapitalmarketfinanceslong-terminvestmentsbybusinesses,governments,andhouseholds.Inparticular,governmentsborrowfromcommercialbanksinthemoneymarket,whileinthecapitalmarket,insurancecompanies,mutualfunds,securitydealers,andpensionfundssupplythefundsforbusinesses.TypesofFinancialMarkets

WitTypesofFinancialMarkets

WithintheGlobalFinancialSystemThemoneymarketmaybesubdividedintoTreasurybills,certificatesofdeposit(CDs),bankers’acceptances,commercialpaper,federalfundsandEurocurrencies.Thecapitalmarketmaybesubdividedintomortgageloans,tax-exempt(municipal)bonds,consumerloans,EurobondsandEuronotes,corporatestock,andcorporatenotesandbonds.TypesofFinancialMarkets

WitTypesofFinancialMarkets

WithintheGlobalFinancialSystemInopenmarkets,financialinstrumentsaresoldtothehighestbidder,andtheycanbetradedasoftenasisdesirablebeforetheymature.Innegotiatedmarkets,theinstrumentsaresoldtooneorafewbuyersunderprivatecontract.Financialcapitalisraisedwhennewlyissuedsecuritiesaresoldintheprimarymarkets.Securitytradinginthesecondarymarketsthenprovidesliquidityfortheinvestors.TypesofFinancialMarkets

WitTypesofFinancialMarkets

WithintheGlobalFinancialSystemInthespotmarket,assetsorfinancialservicesaretradedforimmediatedelivery(usuallywithintwobusinessdays).Contractscallingforthefuturedeliveryoffinancialinstrumentsaretradedinthefuturesorforwardmarket.Contractsgrantingtherighttobuyorsellcertainsecuritiesatspecifiedpriceswithinacertainperiodaretradedintheoptionsmarket.TypesofFinancialMarkets

WitCredit,theCommonCommodity.Theshiftingofborrowersamongmarketshelpstoweldthepartsoftheglobalfinancialsystemtogetherandtobringthecreditcostsinthedifferentmarketsintobalancewithoneanother.SpeculationandArbitrage.Speculatorswhowatchforprofitablearbitrageopportunitieshelptomaintainconsistentpricesamongthemarkets.FactorsTyingAllFinancialMarketsTogetherCredit,theCommonCommodity.FactorsTyingAllFinancialMarketsTogetherPerfectandEfficientMarkets.Thereissomeresearchevidencesuggestingthatfinancialmarketsarecloselytiedtooneanotherduetotheirnearperfectionandefficiency.Intherealworldhowever,marketimperfectionandinformationasymmetryexist.FactorsTyingAllFinancialMaTheDynamicFinancialSystemTheglobalfinancialsystemisrapidlychanging.Inparticular,therearetrendstowardthederegulationoffinancialinstitutionsandservices,theharmonizationofregulations,andglobalintegration,leadingtomoreintensecompetitionaswellasthedevelopmentofnewfinancialservices.TheDynamicFinancialSystemThThePlanofThisBookPartOneprovidesanoverviewoftheglobalfinancialsystem–itsroleintheworld’seconomyanditsbasiccharacteristics.PartTwoexaminestheforcesthatshapeinterestratesandthepricesoffinancialinstruments.PartThreedrawsourattentiontothemoneymarketanditsprincipalinstrumentsandinstitutions(includingthecentralbank).ThePlanofThisBookPartOneThePlanofThisBookPartFourgivesacloserlookatcommercialbanks,creditunions,savingsandloanassociations,moneymarketfunds,insurancecompanies,pensionfunds,mutualfunds,andotherfinancial-servicefirms.PartFiveturnstotheroleofgovernments–federal,state,andlocal–withintheglobalfinancialsystem.ThePlanofThisBookPartFourThePlanofThisBookPartSixfocusesonthefinancialactivitiesofnonfinancialbusinessfirmsandconsumers.PartSevenisdevotedtotheinternationalfinancialsystemandfuturetrendsinglobalfinance.ThePlanofThisBookPartSixMoneyandCapitalMarketsinCyberspaceFormoreonthenatureofthefinancialsystem,seehttp://homepages.uel.ac.uk/K.Bain/fimac223.html.Helponplanningforsavingsandinvestmentsisavailableat/investor.shtml.HowmuchwealthdoestheU.S.reallyhaveandhowunevenlyisitdistributed?See/research/description.htm#1.113andhttp://woodrow.mpls.frb.fed.us/research/.MoneyandCapitalMarketsinCMoneyandCapitalMarketsinCyberspaceForadiscussionoftheimportantrolesperformedbycapitalmarketswithinthefinancialsystem,see/finance/.ForfurtherdiscussiononthelowU.S.savingsrate,see/brm/.Foradiscussionoftheconceptofarbitrage,see/derivglossary.htm.MoneyandCapitalMarketsinCMoneyandCapitalMarketsinCyberspaceSomeexpertsseetheInternetasanearlyperfectmarket.See,forexample,/~tdung/internet.htm.MoneyandCapitalMarketsinCChapterReviewIntroductionTheGlobalEconomyandtheFinancialSystemFlowswithintheGlobalEconomicSystemTheRoleofMarketsintheGlobalEconomicSystemTypesofMarketsTheFinancialMarketsandtheFinancialSystem:ChannelforSavingsandInvestmentChapterReviewIntroductionChapterReviewFunctionsPerformedbytheGlobalFinancialSystemandtheFinancialMarketsSavingsFunctionWealthFunctionLiquidityFunctionCreditFunctionPaymentsFunctionRiskProtectionFunctionPolicyFunctionChapterReviewFunctionsPerforChapterReviewTypesofFinancialMarketsWithintheGlobalFinancialSystemTheMoneyMarketversustheCapitalMarketDivisionsoftheMoneyandCapitalMarketsOpenversusNegotiatedMarketsPrimaryversusSecondaryMarketsSpotversusFutures,Forward,andOptionMarketsFactorsTyingAllFinancialMarketsTogetherTheDynamicFinancialSystemChapterReviewTypesofFinanciChapterReviewThePlanofThisBookChapterReviewThePlanofThisMoneyandCapitalMarkets2ChapterEighthEditionFinancialInstitutionsandInstrumentsinaGlobalMarketplacePeterS.RoseMcGrawHill/IrwinSlidesbyYee-Tien(Ted)FuFinancialAssets,Money,

FinancialTransactions,andFinancialInstitutionsMoneyandCapitalMarkets2Ch

LearningObjectives

Tolearnaboutthechannelsthroughwhichfundsflowbetweenlendersandborrowerswithintheglobalfinancialsystem.Todiscoverthenatureandcharacteristicsoffinancialassets–howtheyarecreatedandretiredbydecision-makerswithinthefinancialsystem.Toexplorethecriticalrolesplayedbymoneyandthelinkagesbetweenmoneyandinflation.LearningObjectivesTolear

LearningObjectives

Toexaminehowfinancialintermediariesandotherfinancialinstitutionslendandborrowfundsandcreateandretirefinancialassetswithintheglobalsystemofmarkets.LearningObjectivesToexamIntroductionThefinancialsystemisthemechanismthroughwhichloanablefundsreachborrowers.Throughtheoperationofthefinancialmarkets,moneyisexchangedforfinancialclaimsintheformofstocks,bonds,andothersecurities,effectivelytransformingsavingsintoinvestmentsothatproduction,employment,andincomecangrow.IntroductionThefinancialsystTheCreationofFinancialAssetsAfinancialassetis…aclaimagainsttheincomeorwealthofabusinessfirm,household,orunitofgovernment,representedusuallybyacertificate,receipt,computerrecordfile,orotherlegaldocument,andusuallycreatedbyorrelatedtothelendingofmoney.TheCreationofFinancialAsseCharacteristicsofFinancialAssetsFinancialassetsaresoughtafterbecausetheypromisefuturereturnstotheirownersandserveasastoreofvalue(purchasingpower).CharacteristicsofFinancialACharacteristicsofFinancialAssetsTheydonotdepreciatelikephysicalgoods,andtheirphysicalconditionorformisusuallynotrelevantindeterminingtheirmarketvalue.Theircostoftransportationandstorageislow,suchthattheyhavelittleornovalueasacommodity.Financialassetsarefungible–theycaneasilybechangedinformandsubstitutedforotherassets.CharacteristicsofFinancialADifferentKindsofFinancialAssetsAnyfinancialassetthatisgenerallyacceptedinpaymentforthepurchasesofgoodsandservicesisaformofmoney.Examplesincludecurrencyandcheckingaccounts.Equitiesrepresentownershipsharesinabusinessfirmandareclaimsagainstthefirm’sprofitsandproceedsfromthesaleofitsassets.Commonstockandpreferredstockareequities.DifferentKindsofFinancialADifferentKindsofFinancialAssetsDebtsecuritiesentitletheirholderstoapriorityclaimovertheholdersofequitiestotheassetsandincomeofaneconomicunit.Theyareeithernegotiableornonnegotiable.Examplesincludebonds,notes,accountspayable,andsavingsdeposits.Derivativeshaveamarketvaluethatistiedtoorinfluencedbythevalueorreturnonafinancialasset.Examplesincludefuturescontracts,options,andswaps.DifferentKindsofFinancialATheCreationProcessforFinancialAssetsToacquireassets,householdsandbusinessfirmsmayusecurrentincomeandaccumulatedsavings–internalfinancing.Aneconomicunitmayalsoraisefundsbyissuingfinancialliabilities(debt)orstock(equities),providedthatabuyercanbefound–externalfinancing.TheCreationProcessforFinanFinancialAssetsandtheFinancialSystemTheactofborrowingorofissuingnewstocksimultaneouslygivesrisetothecreationofanequalvolumeoffinancialassets.Forexample,a$10,000financialassetheldbyahouseholdthathadlentmoneywillbeexactlymatchedbya$10,000liabilityofthebusinessfirmthathadborrowedthemoney.Volumeoffinancialassetscreatedforlenders=VolumeofliabilitiesissuedbyborrowersFinancialAssetsandtheFinanFinancialAssetsandtheFinancialSystemForthebalancesheetofanyeconomicunit,Totalassets=Totalliabilities+Networthwhereassets=realassets+financialassetsForthewholeeconomyandfinancialsystem,Totalfinancialassets=TotalliabilitiesSo,fortheeconomyasawhole,Totalrealassets=TotalnetworthFinancialAssetsandtheFinanFinancialAssetsandtheFinancialSystemSo,societyincreasesitswealthonlybysavingandincreasingthequantityofitsrealassets,fortheseassetsenabletheeconomytoproducemoregoodsandservicesinthefuture.However,thefinancialsystemprovidestheessentialchannelnecessaryforthecreationandexchangeoffinancialassetsbetweensaversandborrowerssothatrealassetscanbeacquired.FinancialAssetsandtheFinanLendingandBorrowingintheFinancialSystemEconomistsJohnGurleyandEdwardShaw(1960)pointedoutthateachbusinessfirm,household,orunitofgovernmentactiveinthefinancialsystemmustconformto:R–E=FA–D where R = Currentincomereceipts E = Currentexpenditures

FA = Changeinholdingsoffinancialassets D = ChangeindebtandequityoutstandingLendingandBorrowingintheFLendingandBorrowingintheFinancialSystemSo,foranygivenperiodoftime,theindividualeconomicunitfallsintooneofthreegroups:Deficit-budgetunit(DBU):E>R,D>FAi.e.netborroweroffundsSurplus-budgetunit(SBU):R>E,FA>Di.e.netlenderoffundsBalanced-budgetunit(BBU):R

=

E,D

=

FAi.e.neithernetlendernornetborrowerLendingandBorrowingintheFLendingandBorrowingintheFinancialSystemSource:BoardofGovernorsoftheFederalReserveSystem,FlowofFundsAccountsHouseholds $857.8 $853.1 $4.7Nonfinancialbusiness 216.0 247.2 -31.2 firmsStateandlocal 29.2 68.6 -39.4 governmentsFederalgovernment 179.5 252.2 -72.7Internationalsector: 435.4 58.6 376.8 foreigninvestors andborrowersNetAcquisitionsofFinancialAssetsNetIncreaseinLiabilitiesNetLender

(+)orNetBorrower

(-)ofFundsMajorSectorsoftheEconomyTheU.S.Economy,3rdQuarterof2001(Annualized)2-49LendingandBorrowingintheFLendingandBorrowingintheFinancialSystemTheglobalfinancialsystempermitsbusinesses,households,andgovernmentstoadjusttheirfinancialpositionfromthatofnetborrower(DBU)tonetlender(SBU)andbackagain,smoothlyandefficiently.LendingandBorrowingintheFWhatisMoney?Allfinancialassetsarevaluedintermsofmoney,andflowsoffundsbetweenlendersandborrowersoccurthroughthemediumofmoney.Moneyitselfisatruefinancialasset,becauseallformsofmoneyinusetodayareclaimsagainstsomeinstitution,publicorprivate.WhatisMoney?AllfinancialasInstitutionalmoneyfundsandcertainmanagedliabilitiesofdepositories,namelylargetimedeposits,repurchaseagreements,andEurodollars.+M

3Householdholdingsofsavingsdeposits,smalltimedeposits,andretailmoneymarketmutualfunds.+M

2WhatisMoney?Themostliquidformsofmoney,namelycurrencyandcheckabledeposits.M

1InstitutionalmoneyfundsandSource:/pihome/fedpoint/fed49.html2-53U.S.MoneyAggregatesMoneySupplyMeasuresSeptember2001SavingsDepositsSmallTimeDepositsRetailMoneyFunds$5.3trillionM2LargeTimeDepositsInstitutionalMMFsEuros&Repos$7.8trillionM2M3BillionsofDollars9,0008,0007,0006,0005,0004,0003,0002,0001,0000$1.2trillionM1M1CurrencyCheckableDepositsSource:/TheFunctionsofMoneyMoneyservesasastandardofvalue(orunitofaccount)forallgoodsandservices.Moneyservesasamediumofexchange,suchthatbuyersandsellersnolongerneedtohaveanexactcoincidenceofwantsintermsofquality,quantity,time,andlocation.Moneyservesasastoreofvalue–areserveoffuturepurchasingpower–althoughthevalueofmoneycanexperiencemarkedfluctuations.TheFunctionsofMoneyMoneyseTheFunctionsofMoneyMoneyfunctionsastheonlyperfectlyliquidassetinthefinancialsystem.Itexhibitspricestability,readymarketability,andreversibility.TheFunctionsofMoneyMoneyfuTheValueofMoneyandOtherFinancial

AssetsandInflationInflationreferstoariseintheaveragepricelevelofallgoodsandservices.Inflationlowersthevalueorpurchasingpowerofmoneyandisaspecialprobleminthefinancialmarketsbecauseitcandamagethevalueoffinancialcontracts.Theoppositeofinflationisdeflation,wheretheaveragelevelofpricesforgoodsandservicesactuallydeclines.TheValueofMoneyandOtherFTheValueofMoneyandOtherFinancial

AssetsandInflationInflationiscommonlymeasuredusingpriceindices,suchas:theConsumerPriceIndex(CPI),theProducerPriceIndex(PPI),ortheGrossDomesticProduct(GDP)DeflatorIndex.TheValueofMoneyandOtherFTheEvolutionofFinancialTransactionsFinancialsystemschangeconstantlyinresponsetoshiftingdemandsfromthepublic,thedevelopmentofnewtechnology,andchangesinlawsandregulations.Overtime,thewaysofcarryingoutfinancialtransactionshaveevolvedincomplexity.Inparticular,thetransferoffundsfromsaverstoborrowerscanbeaccomplishedinatleastthreedifferentways.TheEvolutionofFinancialTraTheEvolutionofFinancialTransactionsDirectFinance–Directlendinggivesrisetodirectclaimsagainstborrowers.Borrowers(DBUs)Lenders(SBUs)Flowoffunds(loansofspendingpowerforanagreed-uponperiodoftime)PrimarySecurities(stocks,bonds,notes,etc.,evidencingdirectclaimsagainstborrowers)

Simple

Difficulttomatch&riskyTheEvolutionofFinancialTraTheEvolutionofFinancialTransactionsSemidirectFinance–Directlendingwiththeaidofmarketmakerswhoassistinthesaleofdirectclaimsagainstborrowers.

Lowersearch(information)costsRisky&matchingisstillrequiredBorrowers(DBUs)Lenders(SBUs)Flowoffunds(loansofspendingpower)Securitybrokers,dealers,&investmentbankersPrimarySecurities(directclaimsagainstborrowers)PrimarySecurities(directclaimsagainstborrowers)Proceedsofsecuritysales(lessfeesandcommissions)TheEvolutionofFinancialTraTheEvolutionofFinancialTransactionsIndirectFinance–Financialintermediationoffunds.

Lowrisk&affordableUltimateborrowers(DBUs)Ultimatelenders(SBUs)Flowoffunds(loansofspendingpower)Financialintermediaries(banks,savingsandloanassociations,insurancecompanies,creditunions,mutualfunds,financecompanies,pensionfunds)SecondarySecurities(indirectclaimsagainstultimateborrowersissuedbyfinancialintermediariesintheformofdeposits,insurancepolicies,retirementsavingsaccounts,etc.)PrimarySecurities(directclaimsagainstultimateborrowersintheformofloancontracts,stocks,