Assignment: Triechia Laud Bsacc 3A

MODULE 2:
Assignment
TRIECHIA LAUD
BSACC 3A
1. What are the economic advantages of a financial intermediary?
The role of financial intermediaries in economic growth has been widely recognized. It
provides liquidity to the economy and permit a higher level of economic activity than would
otherwise be possible. Financial intermediaries through moving of funds from lenders to
borrowers create efficient markets, decrease the transaction costs of capital accumulation and
encourage savings. Financial intermediaries are also essential in increasing total factor
productivity by directing investments to the most productive projects and monitoring them in
cost efficient way. It also offer the benefit of pooling funds enabling lenders make large
investments which in turn benefit the entity they are investing, pooling risk by spreading funds
across diverse range of investments and loans, reducing cost of many financial transactions an
individual investor would otherwise have to make If financial intermediary did not exist, and
providing economies of scale to expertly evaluate the credit profile of potential borrowers and
keep records and profiles cost-effectively.
2. Why are financial markets essential for a healthy economy and economic growth?
Well-developed, smoothly operating financial markets play an important role in contributing
to the health of an economy. There is a strong positive relationship between financial market
development and economic growth as economic development is highly correlated with the
level of efficiency of financial markets and institutions. Financial markets help to efficiently
direct the flow of savings and investment in the economy in ways that facilitate the
accumulation of capital and the production of goods and services. Without efficient transfers
from savers to individuals and firms who need capital, the economy simply could not
function. Individuals and firms do not have the availability of funds to make acquisitions,
investments, payments and other transactions which would obviously affect the level of
employment and productivity, hence our standard of living, would be much lower. This
systematic process established within financial markets and institutions suit the needs of
borrowers and lenders and therefore the overall economy.
3. List three (3) financial institutions found in your locality and answer the following:
a) Classify as to type of financial intermediary
b) Describe their primary functions
c) Explain how they contribute to economic growth
1. Sto. Domingo Development Cooperative (SDDC)

a) It is a Credit Union financial institution.
b) It promotes and undertakes savings and lending services among its
members. It provides life and crop insurance to its members. It also
distributes commodities to its members and non-members.
c) As a financial service cooperative which provides wide array of financial
services, it generates a common pool of funds in order to provide financial
assistance to its members for productive and provident purposes. it
contributes to economic growth through the wider community, mobilizing
significant volumes of savings. It continue to be a major source of growth
within the financial sector and therefore its microeconomic significance
has increased considerably. It has transformed the social and economic
status of several members, enabling them to advance from the
underprivileged class to the home owner class, by providing affordable
terms and conditions for access to loans to finance a wide range of
programs.
2. Cooperative Bank of Cagayan Lallo, Branch

a) It is a Commercial Bank specifically a Regional Rural Bank
b) The Coop Bank of Cagayan plays a lead role in rural financial
intermediation between and among small farmers, micro-entrepreneurs,
professionals and their organization. It provides loans to MSMEs and
farmers, accepts deposits, and credit creations.
c) Coop Bank of Cagayan is one source of financing for small businesses. Its
role in economic development rests chiefly on their role as financial
intermediaries. In this capacity, it helps drive the flow of investment
capital throughout the marketplace. The chief mechanism of this capital
allocation in the economy is through the lending process which helps
commercial banks. As it helps finance small businesses and supports
farmers. Once funded, the small business may begin operations and
embark on a growth plan. The aggregate effect of small business activity
generates a significant portion of employment around the country.
3. Development Bank of the Philippines Lallo, Branch

a) DBP is a Commercial Bank type of Financial Intermediary
b) It performs all other functions of a thrift bank. Its primary objective is to
provide banking services principally to cater to the medium and long-term
needs of agricultural and industrial enterprises with emphasis on small and
medium-scale industries.
c) DBP has taken upon itself the strategic task of influencing and
accelerating sustainable economic growth through provision of resources,
for the continued well-being of the Filipino People. Through its
continuous support on business sectors, it can catalyse the rural economy
and make it robust.

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MODULE 2:

1. Sto. Domingo Development Cooperative (SDDC)

2. Cooperative Bank of Cagayan Lallo, Branch

3. Development Bank of the Philippines Lallo, Branch

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