FINC 409 Lecture Notes - Lecture 3: Federal Deposit Insurance Corporation, National Bank Act, Federal Reserve Act

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Bank an establishment for the custody, loan, exchange, or issue of money, for the extension of credit and for facilitating the transmission of funds. Roles of financial institutions: loans money, invest money, saves money, financial intermediation: the process by which savings are accumulated in financial institutions (intermediaries) and, in turn, lent or invested. Financial institutions: depository institutions: accept deposits from individuals and then lend these pooled savings to businesses, governments, and individuals. Commercial banks: accept deposits, issue check-writing accounts, and make loans to businesses and individuals. Insurance companies: provide financial protection to individuals and businesses for life, property, liability, and health uncertainties. Pension funds: receive contributions from employees and/or their employers and invest the proceeds on behalf of the employees: securities firms: accept and invest individual savings and also facilitate the sale and transfer of securities between investors. Investment companies: sell shares in their firms to individuals and others and invest the pooled proceeds in corporate and government securities.

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