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NONBANK OPERATIONS (Introduction (Include (Finance Companies, Insurance…
NONBANK OPERATIONS
Introduction
A part of financial intermediary institutions
Not commercial banks
Include
Finance Companies
Insurance Companies
Pension Funds
Mutual Funds
Thrift Institutions/ Saving Institutions
Securities Firms
Finance companies
Types
Specialize on providing short- and intermediate-term
Consumer finance companies
Business finance companies
Captive finance subsidiaries
Sources and uses of funds
Sources
Loans from banks
Commercial paper
Deposits
Bonds
Capital
Uses
Consumer loans
Business loans and leasin
Real estate loans
Insurance Companies
Background
Created to provide insurance and retirement funding
Employ underwriters to calculate the risk
Life insurance operations: a dominant force in the insurance industry
Sources of funds
About 31% total income
Provision of annuity plans
Investment income
Capital
Pension Funds
A saving plan for employees that can be used for retirement
Receive premiums from employer
Pension Funds
Public pension funds
Private pension plans
Mutual funds
An investment company that sell shares and uses proceeds to manage a portfolio of securities
Types of funds
Closed-end funds
Based on mutual categories
Open-end funds