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FPC001 Masters of Financial Planning Kaplan Business School Australia

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Kaplan Business School Australia

FPC001 Masters of Financial Planning Kaplan Business School Australia

Topic 1: Overview of global financial markets and participants
lOMoARcPSD|5735817

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lOMoARcPSD|5735817
Topic 1: Overview of global financial markets and participants
Financial Markets and Economic Principles
Contents
Overview …………………………………………………………………………………………………………………….. 1.1
Topic learning outcomes …………………………………………………………………………………………………………. 1.1
Part 1: Overview of market participants in the financial system …………………………………………….. 1.2
1 The flow of funds in a financial system …………………………………………………………………… 1.2
1.1 Main functions of the financial system …………………………………………………………………………… 1.4
1.2 The flow of funds ………………………………………………………………………………………………………… 1.4
1.3 Key financial instruments in the flow of funds ………………………………………………………………… 1.5
1.4 What is a financial market?…………………………………………………………………………………………… 1.7
1.5 Direct investment ………………………………………………………………………………………………………… 1.7
1.6 Intermediation (indirect investment) …………………………………………………………………………….. 1.8
1.7 Advantages of financial intermediation ………………………………………………………………………….. 1.9
1.8 Disadvantages of financial intermediation ……………………………………………………………………. 1.10
1.9 Link between intermediaries and financial markets……………………………………………………….. 1.11
1.10 The importance of liquidity …………………………………………………………………………………………. 1.11
2 Key participants in the financial system …………………………………………………………………. 1.12
2.1 Types of participants ………………………………………………………………………………………………….. 1.12
3 Intermediaries in Australia ………………………………………………………………………………….. 1.13
3.1 The government as an intermediary…………………………………………………………………………….. 1.14
3.2 The RBA ……………………………………………………………………………………………………………………. 1.14
3.3 Banks and other ADIs …………………………………………………………………………………………………. 1.14
3.4 Money market corporations (merchant or investment banks) ………………………………………… 1.17
3.5 Finance companies …………………………………………………………………………………………………….. 1.18
3.6 Friendly societies ……………………………………………………………………………………………………….. 1.18
3.7 Superannuation funds ………………………………………………………………………………………………… 1.18
3.8 Life insurance companies ……………………………………………………………………………………………. 1.18
3.9 General insurance companies ……………………………………………………………………………………… 1.19
3.10 Stockbrokers …………………………………………………………………………………………………………….. 1.19
3.11 Fund managers and portfolio managers ……………………………………………………………………….. 1.19
3.12 Financial advisers ………………………………………………………………………………………………………. 1.20
3.13 Do intermediaries drive the flow of funds? …………………………………………………………………… 1.20
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Topic 1: Overview of global financial markets and participants
Part 2: Overview of global financial markets …………………………………………………………………….. 1.22
4 Globalisation of financial markets …………………………………………………………………………. 1.22
4.1 Factors driving globalisation ……………………………………………………………………………………….. 1.22
4.2 Implications of globalisation ……………………………………………………………………………………….. 1.23
4.3 Australian perspective ……………………………………………………………………………………………….. 1.25
5 Major financial centres ……………………………………………………………………………………….. 1.32
6 Emerging markets ……………………………………………………………………………………………… 1.33
7 Australia’s place in global financial markets ……………………………………………………………. 1.33
7.1 Importance of financial services to Australia…………………………………………………………………. 1.34
7.2 Australia’s markets in a regional context………………………………………………………………………. 1.35
7.3 Australia’s funds management industry ……………………………………………………………………….. 1.35
7.4 Australia and the Asian region …………………………………………………………………………………….. 1.35
References …………………………………………………………………………………………………………………. 1.36
Suggested answers ………………………………………………………………………………………………………. 1.37

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FPC001 Masters of Financial Planning Kaplan Business School Australia

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