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CHAPTER 1 : INTRODUCTION AND OVERVIEW TO FINANCIAL SYSTEM
What is…
CHAPTER 1 : INTRODUCTION AND OVERVIEW TO FINANCIAL SYSTEM
What is Financial Institution?
According to Kalari (1995), a financial institution can be defined as a business firm whose principal assets are financial assets or claims are stocks, bonds and loans, instead of real assets, such as buildings, equipment's and raw materials.
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A framework for describing set of markets, organizations and individuals that engage in the transaction of financial instruments (securities), as well as regulatory institutions.
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Receiving deposits on current account, deposits account, saving accounts or other similar account;
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Provision of finance i.e. lend money, leasing, factoring, purchases of BOE & acceptance or guarantee any liability, obligation or duty of any person.
Other business as BNM, with the approval of MOF.
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comprising development financial institutions, provident and pension funds, insurance companies, takaful operators and saving institutions,
Perform an important role within the financial system. (Channeling funds from surplus units to deficit units)
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Islamic Banking is a financial institutions who statutes, rules and procedures expressly state its commitment to the principle of Islamic Shariah and to the banning of the receipt and payment of riba on any of it’s operation.
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- The Sunnah of the Holy Prophet (SAW)
- Ijma’ (consensus of the Ummah)
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THE MONEY MARKET- a market for the movement of short term funds. To meet the liquidity requirements of market participants
FOREIGN EXCHANGE MARKET- a market for the buying and selling of foreign currencies to meet the foreign currency requirements of corporations which can either be exporters and/or importers
CAPITAL MARKET- consist of (i) equity market and (ii) bond market where the focus is more on the long term basis of trading of instruments
Bond Market - a place where private and public sectors can raise funds by issuing private and government debt securities
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DERIVATIVES MARKET- the trading of instruments such as futures, options, swaps and forwards
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