The economics of money, banking, and financial institutions 2nd ch12

Chapter 12 Nonbank Finance © 2005 Pearson Education Canada Inc Market Share of Financial Intermediaries © 2005 Pearson Education Canada Inc 12-2 Insurance Companies Life Insurance Companies Regulated by the OSFI and the Canadian Life and  Health Insurance Compensation Corporation  (CompCorp) Hold illiquid long­term assets Property & Casualty Insurance Companies Regulated by the OSFI and the Property and  Casualty Insurance Compensation Corporation  (PACIC) Hold more liquid assets © 2005 Pearson Education Canada Inc 12-3 Balance Sheet of Life Insurance Companies © 2005 Pearson Education Canada Inc 12-4 Balance Sheet of P&C Insurance Companies © 2005 Pearson Education Canada Inc 12-5 Insurance Management Screening Risk-based premiums Restrictive provisions Prevention of fraud Cancellation of insurance Deductibles Coinsurance Limits on amounts of insurance © 2005 Pearson Education Canada Inc 12-6 Other Institutions Pension Funds Rapid growth: encouraged by tax policy Bigger role in stock market Problem of underfunding Private plans Public plans A Social Security B CPP and QPP Finance Companies Minimal regulation by provinces Rapid growth Three types: A Sales finance companies B Consumer finance companies © 2005 Pearson Education C Business finance companies Canada Inc 12-7 Balance Sheet of Non-Depository Credit Intermediaries © 2005 Pearson Education Canada Inc 12-8 Other Institutions Mutual Funds Regulated by a variety of agencies, including the OSFI Open­end vs. closed­end Load vs no­load Money Market Mutual Funds Government Financial Intermediation Crown Finance Companies: CMHC, FCC, EDC, BDC Moral hazard problem of government loan guarantees Securities Market Institutions Investment Banks Securities Brokers and Dealers Organized Exchanges All are regulated by provincial securities commissions © 2005 Pearson Education Canada Inc 12-9 ...Market Share of Financial Intermediaries © 2005 Pearson Education Canada Inc 12-2 Insurance Companies Life Insurance Companies Regulated by the OSFI and the Canadian Life and Health Insurance Compensation Corporation ... Property & Casualty Insurance Companies Regulated by the OSFI and the Property and Casualty Insurance Compensation Corporation  (PACIC) Hold more liquid assets © 2005 Pearson Education Canada Inc 12-3 Balance Sheet of Life Insurance... 12-7 Balance Sheet of Non-Depository Credit Intermediaries © 2005 Pearson Education Canada Inc 12-8 Other Institutions Mutual Funds Regulated by a variety of agencies, including the OSFI Open­end vs. closed­end