GROUP 5 PRESENTATION

TOPICS
1. Financial Institutions.
2. Overview of Banking business.
3. Constituents of financial system.
4. Intermediaries.
5. Non Intermediaries.
6. Regulatory Agencies.
7. Financial System in Nigeria.
8. What Is Globalization.
9. Impact of Globalization on Investment Banking.
10. Pros and Cons of financial Globalization.

FINANCIAL INSTITUTIONS
Financial institutions are organizations that provide various
financial services to individuals, businesses, and governments.
These services can include banking, lending, investment,
insurance, and more. Common types of financial institutions
include:
● CENTRAL BANK: Central banks are responsible for regulating
a country's money supply, interest rates, and overall monetary
policy.

● Banks: Banks are the most well-known financial institutions

and offer services like savings accounts, checking accounts,
loans, and mortgages.
● Credit Unions: Credit unions are member-owned financial
cooperatives that offer similar services to banks but often with
lower fees and better interest rates.

● Investment Banks: These institutions help companies raise

capital by issuing stocks and bonds, and they also provide
advisory services for mergers and acquisitions.
● Insurance Companies: Insurance companies offer various
types of coverage, including life insurance, health insurance,
property and casualty insurance, and more.

● Brokerage Firms: Brokerage firms facilitate the buying and

selling of financial securities like stocks, bonds, and mutual
funds.

● Asset Management Companies: These companies manage

investment portfolios on behalf of individuals and institutions,
aiming to generate returns on investments.

● Hedge Funds: Hedge funds are investment funds that employ

various strategies to generate high returns for their investors.

● Private Equity Firms: Private equity firms invest in private

companies, often with the goal of improving their operations
and later selling them for a profit.

● Pension Funds: Pension funds manage retirement assets and

investments on behalf of employees and retirees.
Financial institutions play a crucial role in the global economy,
facilitating the flow of funds and helping individuals and
organizations manage their finances and investments. They are
subject to extensive regulatory oversight to ensure stability
and protect consumers.

OVERVIEW OF BANKING BUSINESS

Business banking is a company's financial dealings with an

institution that provides business loans, credit, savings
accounts, and checking accounts, specifically designed for
companies rather than for individuals.
Business banking occurs when a bank, or division of a bank,
only deals with businesses. A bank that deals mainly with
individuals is generally called a retail bank, while a bank that
deals with capital markets is known as an investment bank.
There are some banks that deal with both types of clients.

KEY TAKEAWAYS

Business banking is a range of services provided by a bank to a

business or corporation.
Services offered under business banking include loans, credit,
savings accounts, and checking accounts, all of which are
tailored specifically to the business.
Banks are able to offer business, retail, and investment
banking services under one roof.

Banking is an industry that deals with credit facilities, storage

for cash, investments, and other financial transactions. The
banking industry is one of the key drivers of most economies
because it channels funds to borrowers.

Business banking includes a broad range of services offered by

a bank to a business or corporation.
Some banks have the ability to offer investment banking,
retail, and business banking services.
In the United States, the largest bank is JP Morgan Chase in
regards to assets.
There is a broad range of business banking services, from
savings accounts, checking accounts, credit, and loans. These
services are also tailored specifically to the individual business.

What Is Business Banking?

Business banking relates to the financial dealings that a
business has with a financial institution. Essentially, business
banking is the same as personal banking but is specific to
business. This is for things such as savings accounts, checking
accounts, credit, and business loans.
These services are designed specifically for companies and
businesses instead of consumer banking. Business bank

Services Offered by Business Banks

Business banks provide a wide range of services to companies
of all sizes. Aside from business checking and savings
accounts, business banks offer financing options, cash
management solutions, payroll services, and fraud protection.

Bank Financing: Bank financing is a primary source of capital

for business expansion, acquisitions, and equipment purchases,
or simply to meet growing operating expenses. Depending on a
company's needs, business banks can offer fixed-term loans,
short- and long-term loans, lines of credit, and asset-based
loans. Banks provide equipment financing, either through fixed-
loans or equipment leasing. Some banks cater specifically to
certain industries such as agriculture, construction, and
commercial real estate.

Cash Management: Also referred to as treasury management,

cash management services help businesses achieve greater
efficiency in managing their receivables, payables, cash on
hand, or liquidity. Business banks set up specific processes for
businesses that help streamline their cash management,
resulting in lower costs and more cash on hand.
Banks provide businesses with access to Automated Clearing
House (ACH) and electronic payment processing systems to
accelerate money transfers. They also allow for the automatic
movement of money from idle checking accounts into interest-
bearing savings account.

Payroll Services

Fraud Protection

Industry Advice

CONSTITUENTS OF FINANCIAL SYSTEM

• WHAT IS FINANCIAL SYSTEM

A financial system is a complex network of institutions,
markets, and intermediaries that facilitate the flow of funds
between individuals, businesses, and governments.
•FOR INDIVIDUALS
It offers services such as
Bank accounts, loans and advances and also provide
investment opportunities for individuals to save,invest and
grow their funds.

•FOR BUSINESSES
It enable businesses to access capitals through loans, issue
stocks and bonds,
and also enable them to raise funds from the financial markets.
Since the financial market is a platform, an avenue, a
marketplace where financial securities are being traded.

FOR GOVERNMENT
financial system enables governments to manage their funds,
issue bonds and collect tax.
In general, financial system act as a bridge connecting
individual, businesses and governments to efficiently allocate
and transfer of funds.
THE CONSTITUENTS OF FINANCIAL SYSTEM INCLUDE

i THE BANKS
banks are financial institutions that render services such as
acceptance of deposits specialize in short term loan facilities
and also render advicesry service for individual & business to
invest their funds

ii CREDIT UNION
It is like a financial institution but a bit different from a bank.
They are corporate organization usually owned by members
who are people with common interest & they provide similar
service as the banks such as savings account, loans & other
financial service. On the other hand they charge lower fees and
interest because their am is to improve the well being of their
members

iii STOCK EXCHANGE

The stock market is a platform an avenue or marketplace
where financial securities are being traded such as stocks,
bonds, & debentures

iv THE INSURANCE COMPANY

The insurance company is a financial institution that provide
insurance policies for individuals & businesses, e.g when
purchasing a new vehicle, you can register it with the
insurance company to be insured incase of risk like accident or
theft the insurance company can indebtnify you while you pay
little tipens known as premiums.

INTERMEDIARIES
intermediaries play a crucial role in merchant banking,
facilitating various financial transactions and services for
businesses and individuals. These intermediaries often act as
a bridge between clients and the broader financial market. In
merchant banking, several types of intermediaries are
involved:
● Investment Banks: These institutions are at the heart of
merchant banking. They help companies raise capital
through various means, such as initial public offerings
(IPOs), private placements, and debt issuance. They also
provide advisory services related to mergers and
acquisitions, corporate restructuring, and other financial
strategies.
● Stockbrokers: Stockbrokers facilitate the buying and
selling of securities, such as stocks and bonds, on behalf of
their clients. In merchant banking, they may execute trades
for clients looking to invest or divest their holdings.
● Underwriters: Underwriting involves assuming the financial
risk of a company's IPO or debt issuance in exchange for a
fee. Merchant banks often act as underwriters, helping
companies go public or issue debt securities.
● Registrars and Transfer Agents: These intermediaries
maintain records of shareholders and bondholders, ensuring
that ownership transfers are properly recorded and dividends
or interest payments are distributed to investors.
● Depositories: They provide a secure and centralized
location for holding and transferring securities. Depositories
help streamline the settlement process, making it more
efficient and secure.
● Credit Rating Agencies: These agencies assess the
creditworthiness of companies and financial instruments,
providing credit ratings that help investors make informed
decisions. Merchant banks may rely on these ratings when
structuring financing deals.
● Custodian Banks: Custodian banks safeguard and manage
the assets of institutional investors, such as mutual funds
and pension funds. They also provide services related to
safekeeping, clearing, and settlement of securities.
● Financial Advisors: Merchant banks often employ financial
advisors who provide strategic advice to clients on various
financial matters, including investment strategies, asset
allocation, and risk management.
● Legal and Accounting Firms: Legal and accounting firms
assist in due diligence, regulatory compliance, and the
 structuring of financial transactions. They ensure that all
legal and financial aspects of a deal are handled correctly.
● Trustees: Trustees are responsible for ensuring that the
terms and conditions of bond and debt issuances are
adhered to. They act in the interest of bondholders and
oversee the payment of interest and principal.
● Insurance Companies: They provide various insurance
products, including coverage for risks associated with
investments and financial transactions.
● Clearing Houses: Clearing houses act as intermediaries in
financial markets, facilitating the clearing and settlement of
trades, ensuring that transactions are completed securely
and efficiently.
These intermediaries collectively help merchant banks and their
clients navigate the complex world of finance, manage risks,
and access capital markets to meet their financial goals. Each
intermediary has a specific role in the financial ecosystem,
contributing to the overall functioning and stability of the
market.

NON-INTERMEDIARIES
Non intermediary is also know as Nonbank financial
institution (NBFI) is a financial institution that does not have a
full banking license and cannot accept deposits from the public.
However, NBFIs do facilitate alternative financial services, such
as investment (both collective and individual), risk pooling,
financial consulting, brokering, money transmission, and check
cashing. NBFIs are a source of consumer credit (along with
licensed banks). Examples of nonbank financial institutions
include insurance firms, venture capitalists, currency
exchanges, some microloan organizations, and pawn shops.
These non-bank financial institutions provide services that are
not necessarily suited to banks, serve as competition to banks,
and specialize in sectors or groups.
What is venture capitalist
Venture capitalists are individuals or firms that provide funding,
typically in the form of equity investment, to startups and
early-stage companies with high growth potential. They invest
in these businesses in exchange for ownership shares, and they
often play an active role in advising and supporting the
companies they invest in. Venture capitalists aim to earn a
significant return on their investments when these companies
succeed and grow, usually through an eventual exit strategy
such as an acquisition or an initial public offering (IPO). Their
investments can be critical for helping innovative and high-risk
ventures get off the ground and expand.
What Is a Currency Exchange?
A currency exchange is a licensed business that allows
customers to exchange one currency for another. Currency
exchange of physical money (coins and paper bills) is usually
done over the counter at a teller station, which can be found in
various places such as airports, banks, hotels, and resorts.
Currency exchanges make money by charging a nominal fee
and through the bid-ask spread in a currency.
Also known as a "bureau de change" or "casa de cambio," a
currency exchange should not be confused with the foreign
exchange (forex) market where traders and financial
institutions transact in currencies.

REGULATORY AGENCIES
A regulatory agency is a government body that is
responsible for overseeing a specific sector of the economy and
ensuring that the sector operates in accordance with the law.
In Nigeria, regulatory agencies are responsible for
implementing and enforcing laws and regulations in their
respective sectors. These agencies play an important role in
protecting consumers, ensuring fair competition, and
promoting economic development. Some examples of
regulatory agencies in Nigeria include
● the Central Bank of Nigeria (CBN)
● Security and exchange commission (SEC)
● Federal ministry of finance.
● National deposit insurance commission.
● National pension commission.
● The Nigerian insurance commission

● CENTRAL BANK OF NIGERIA (CBN)

The Central Bank of Nigeria (CBN) is the country's central bank
and the primary regulator of the financial sector. The CBN is
responsible for formulating and implementing monetary policy,
maintaining price stability, and promoting a sound and efficient
financial system.
The function of CBN in Nigeria is divided into two
》 The traditional function
》 Developmental function
TRADITIONAL FUNCTION
1. Issuing of legal tender currency
2. Maintenance of external reserve
3.promotion of monetary stability and a sound financial system
4. Provision of financial services to other Banks and financial
institution
5. Bank and financial adviser to the government
6. Bankers to other Banks
DEVELOPMENTAL FUNCTION
1.promotion of money and capital market
2. Man power development
3. Provision of finance for agriculture
4. Establishment of specialize institution
5. Export promotion
2. SECURITY AND EXCHANGE COMMISSION
The Securities and Exchange Commission (SEC) is the Nigerian
government agency responsible for regulating the country's
capital markets. The SEC was established in 1979 and is
responsible for ensuring that the capital markets are fair,
efficient, and transparent.
FUNCTION OF SEC
1. Registration of all eligible securities to be offered for
subscription or sale to the public
2. To maintain surveillance over the security market to ensure
compliance with requirements of for just and equitable
dealings.
3. To supervise the securities market and the stock exchange
4. To ensure adequate protection of the investing public from
fraud and deceit
5. To determine the time when securities of the company are to
be sold.
3. FEDERAL MINISTRY OF FINANCE
The Federal Ministry of Finance (FMF) is the government
agency responsible for managing the Nigerian government's
finances. The FMF is responsible for formulating and
implementing the country's fiscal policy, which includes
managing the budget, collecting taxes, and borrowing money
on behalf of the government.
FUNCTION OF FMF
The most important function of the Federal Ministry of Finance
(FMF) is to formulate and implement fiscal policy. This is
because fiscal policy is the government's main tool for
achieving its economic objectives, such as promoting economic
growth, reducing unemployment, and maintaining price
stability. The FMF also plays a key role in ensuring that the
government's spending is in line with its revenue, and that the
country's public debt is managed responsibly. Overall, the
FMF's main function is to ensure that the government's
finances are managed in a way that supports economic growth
and development.
4. NATIONAL DEPOSIT INSURANCE COMMISSION
The Nigerian Deposit Insurance Corporation (NDIC) is a
government agency responsible for the protection of bank
depositors in Nigeria. The NDIC was established in 1988 as part
of the Nigerian government's response to the financial crisis of
the 1980s, which saw a number of banks fail, causing
widespread economic hardship. The NDIC insures deposits up
to a certain limit, and also works to ensure that banks are
solvent and well-managed. It is one of the key agencies
responsible for maintaining the stability of the Nigerian banking
system.
5. NATIONAL PENSION COMMISSION
The National Pension Commission (NPC) is a regulatory agency
that was established in 2004 to oversee the pension sector in
Nigeria. The NPC's main function is to ensure that all pension
funds are managed in accordance with the law, and that
pensioners receive the benefits to which they are entitled. The
NPC also has a number of other functions, including developing
regulations and guidelines for the sector, registering and
supervising pension operators, and promoting the development
of the sector.
6. THE NIGERIAN INSURANCE COMMISSION
The Nigerian Insurance Commission (NAICOM) is a regulatory
agency that is responsible for supervising and regulating the
insurance sector in Nigeria. NAICOM was established in 1997 to
promote the growth and development of the insurance
industry, and to ensure that insurance companies operate in
accordance with the law.
FUNCTION OF NAICOM
The commission's main functions include
1. licensing and regulating insurance companies
2. Approving the terms and conditions of insurance contract
and regulations to protect consumers
3.. NAICOM also works to raise awareness about insurance
products and services among consumers
4. It promote good corporate governance in the insurance
industry.

NIGERIA FINANCIAL SYSTEM.

Nigeria's financial system is a complex and evolving network of

institutions, markets, and regulations that facilitate the
allocation of financial resources within the country.

What is a system?
It’s a set of interrelated parts working on same direction to
meet a projected goal.

What is Finance?
It is simply the act of managing money

Structure of the Nigerian Financial System

This comprises of the bank and non-bank financial institutions.
 The banking financial institutions
Central bank of Nigeria, Commercial banks, Merchant bank,
Development bank,
 The non-bank financial institution
Insurance Company, Finance houses, Financial market, Bureau
de change, etc.
They do not have a complete banking license and cannot
accept deposits from the general public.

Regulatory Institution
The Central Bank of Nigeria (CBN): is the regulatory authority
that oversees and regulates the banking institution through its
monetary policies.
Nigeria Deposit Insurance Commission (NDIC): supervises
banks to protect depositors, ensure monetary stability and
effective/efficient payment system as well as to promote
competition and innovation in the banking system
The Securities and Exchange Commission (SEC): regulates the
capital market activities.
Role of the Nigerian Financial System
 Intermediation of Funds
 Financial Stability
 Facilitation of Savings and Investments
 Monetary Policy Implementation
 Risk Management
Others:
 The financial system provides a platform for financial
infrastructure to help allocate resources to
individuals/units that are potentially more productive, to
invest those resources.
 The financial system gives room for more efficient transfer
of resources/funds.
 The financial system provides a balance between those
who have funds to invest and those in need of funds.
WHAT IS GLOBALIZATI0N
Globalization refers to the spread of the flow of financial
products, goods, technology, information and jobs across
national borders and cultures.
Financial globalization refers to the integration and
interdependence of financial markets and institutions on a
global scale. It involves the flow of capital, investments, and
financial services across borders.
Globalization refers to the increasing interconnectedness, and
interdependence of countries, economies, cultures and
societies across the world, it is a multifaceted phenomenon
because it involves a wide range of interconnected elements
including economics, culture, technology, politics etc. and it is
driven by various factors which includes
1.advancement in technology
2. trade liberalization
3.cultural exchange
4. international corporation
Some of the key aspect of globalization
1. Trade and economic integration
2. [FDI] Foreign direct investment
3. Trade liberalization
4. Global supply chain
5. Technology
1. TRADE AND ECONOMIC INTEGRATION;
Globalization has led to the expansion of international trade
and the integration of economies .it involves exchange of goods
and services as well as capital on a global scale.
2. FOREIGN DIRECT INVESTMENT [FDI]
Companies invest in foreign countries, establishing subsidiaries
or acquiring stakes in companies abroad. This enhances
economic ties between nations
3. TRADE LIBERALIZATION
This refers to the removal or reduction of barriers to
international trade and the opening up of markets to foreign
competition. This process aims to increase the flow of goods
and service between countries and also promote economic
growth.
4.GLOBAL SUPPLY CHAIN
Businesses often rely on complex global supply chains to
manufacture and distribute products efficiently.
5.TECHNOLOGY
Advances in communication, transportation, and information
technology have greatly facilitated globalization and it has also
made it easier for businesses to connect globally.
MERITS OF GLOBALIZATION
1.it facilitates economic growth
2. access to goods and service
3. Job creation
4.technological advancement
5. cultural exchange
6. access to information
7. higher standard of living
DEMERITS OF GLOBALIZATION
1. Income inequality
2. Job displacement
3. Cultural homogenization
4. Exploitation of labor
5. Environmental impact
6. Loss of sovereignty
7. Economic Crisis transmission

IMPACT OF GLOBALIZATION ON INVESTMENT BANKING.

Globalization has had a significant impact on investment
banking, both in terms of opportunities and challenges. Here
are some key impacts of globalization on investment banking:

1. Market Expansion: Globalization has opened up new markets

for investment banks to operate in. Investment banks can now
access a broader client base and participate in deals on a
global scale. This has increased the potential for business
growth and revenue generation.
2. Cross-border Transactions: Globalization has led to an
increase in cross-border transactions, such as mergers and
acquisitions, capital raising, and international trade.
Investment banks play a crucial role in facilitating these
transactions by providing advice, underwriting, and other
financial services. The ability to execute cross-border
transactions has expanded the scope of investment banking
activities.
3. Competition: Globalization has heightened competition in the
investment banking industry. As international banks enter new
markets, local banks must compete with them on a global
scale. This has led to increased pressure on investment banks
to improve efficiency, enhance services, and differentiate
themselves in order to remain competitive.
4. Regulatory Challenges: Globalization has brought about the
need for harmonized regulations and oversight across different
jurisdictions. Investment banks must navigate complex
regulatory frameworks in multiple countries, which can add
compliance costs and operational complexities. Global
regulatory changes, such as the implementation of Basel III,
have also impacted the capital requirements and risk
management practices of investment banks.
5. Connectivity and Technology: Globalization has spurred
advancements in technology and connectivity, which have
transformed the way investment banks operate. Banks can now
leverage technology to streamline operations, enhance risk
management, improve trading capabilities, and provide better
client services. Globalization has also facilitated the sharing of
information and market insights across borders, enabling
investment banks to make more informed decisions.
6. Talent Mobility: Globalization has created opportunities for
talent mobility in the investment banking industry.
Professionals can now work in different countries and gain
exposure to diverse markets and cultures. This has facilitated
the exchange of expertise and best practices, leading to a more
globally-minded workforce.
Overall, globalization has expanded the reach and scope of
investment banking, providing opportunities for growth and
diversification. However, it has also brought increased
competition, regulatory challenges, and the need for
adaptability to changing market dynamics. Investment banks
must navigate these impacts and continuously evolve their
strategies to thrive in a globalized environment.

PROS AND CONS OF FINANCIAL GLOBALIZATION

Advantages of financial globalisation

1-Promote growth in developing countries

Financial globalisation promotes economic growth rate in the

developing countries through different ways like reducing the
cost of capital. It also enhances increased productivity as a
result of better risk management, transfer of technology from
advanced countries to less advanced countries and
improvement of domestic financial sectors.

The stock market liberalisation improves allocation of risks

through sharing between foreign and domestic investors which
in turn encourages firms to invest. The increase in capital flows
liquidates the domestic stock market thereby reducing the
equity risk premiums thus low rate in raising capital for
investment.

Stimulation of the domestic financial sector development

through increased foreign ownership of domestic banks
facilitates the access to international financial markets and
improves the regulatory and supervisory of the banking
industries. Foreign banks introduce different financial
instruments and techniques that foster technology which
improves domestic markets.

Specialisation causes increased productivity, but without risk

management it produces high output and consumption
volatility. This increase in volatility may discourage countries
from using specialized activities and thus lowering the saving
and investment rates.

2-Reduce macroeconomic volatility

Financial globalization facilitates countries to successfully run

their production and utilization precariousness through
diversification of risks. As financial integration increases, the
volatility of consumption should be reduced relative to the
output.
Countries can then be in a position to offload their income risks
to the world market through the global financial diversification.
Developing countries share risks through selling their goods
and services to the global markets and thus generate great
profits.

In an effort to moderate their economy at, large least

developed countries have enhanced the banking industry and
have boasted its financial markets thus reducing the rate of
consumption. Financial incorporation helps the poor developing
nations to augment their production base through focusing on
comparative advantages thus making economies further
susceptible to blows that are particular to industries

Disadvantages of Financial
Globalisation

Financial crisis
The governments, regulators and supervisors in the world
markets are mandated to ensure that participants follow the
stipulated rules. Due to risk prevalence and the greediness of
the participants over the principles of economy, a financial
crisis erupts in the world market.

Currency crisis
In many instances financial crisis results to currency crisis due
to overextended domestic lending. Currency crisis occurs due
to high indebtness of a country or a non favourable economic
situation that raises the exports thus stimulating the aggregate
domestic demand. In addition currency depreciation may cause
people to speculate thus selling that currency. The central bank
of such countries should have enough foreign reserves to buy
the excess supply of home currencies otherwise it will lose
value against foreign currencies.

Fiscal imbalances

Financial globalisation shows the reduced responsibility of

banks and governments incompetence's. Governments may
have huge debts due to over borrowing thus face difficulties in
paying them. They are then forced to obtain funds from the
citizens through the issue of treasury bonds. This means that in
making the payment they repay the sum borrowed with an
addition interest. Persistence of these countries budgets deficit
can raise the suspicion from foreign borrowers who in turn
demand an increase in the interest rates. The prices of
government bonds fall and the balance sheet of banking
institution holding them deteriorates thus decelerates the net
worth of the bank and reduces lending. In addition people may
withdraw their deposits in fear of bankruptcy.