THE PHILIPPINE

FINANCIAL
SYSTEM
Presented by:
GROUP 5
 List of contents
The Philippine Financial Development of the
System Philippine Financial System

Elements of the financial The Structure of the Philippine

system Financial System

Function of Financial System

Theoretical
 Nature of the philippine
financial system
The financial system is composed of various
banks, insurance companies, pawnshops,
credit unions, money market, central bank
and monetary laws and policies. The most
dominant and powerful financial institutions
are the World bank, International Monetary
Fund, Asian Development Bank and the
Multinational or Transnational banks.
Although these are involved in the global
banking or finance, they greatly influence the
operations of our financial system. Hence
they also CONTROL our economy.
 ELEMENTS OF THE
FINANCIAL SYSTEM

Financial Claims Institutions Usually evidenced by

financial instruments:
comprise the money and the
rights to receive money Debts- does not convey ownership
under specific circumstances. Equities- conveys ownership rights
like investments-share of stocks
which earned dividend.
 ELEMENTS OF THE FINANCIAL
SYSTEM

Financial Institutions
Financial Institutions
Financial System- a network of Financial intermediaries- deal with
various institutions, together with the creation and issuance of
government agencies, laws and claims against themselves, and
policies, which generates, use the proceeds to acquire and
circulates and controls money and hold claims against others
credit.
 ELEMENTS OF THE FINANCIAL
SYSTEM

Government agencies
Financial Markets
The role of government agencies
these institutions expedite
has a tremendous impact on the
transactions in
financial system.
financial claims.
For example, one very important
• Examples: Manila Stock Exchange
goal of the Bangko Sentral ng
and other organizations dealing with
Pilipinas is to attain internal and
money market operations.
external stability of our peso.

.
ELEMENTS OF THE FINANCIAL
SYSTEM

Laws and Policies

Laws and policies have been

formulated to ensure the desired
levels of investment, employment,
production, income, and
consumption.
 FUNCTIONS OF FINANCIAL
INSTITUTIONS

1
The general function of financial institutions is to facilitate the transfer
of funds from the savers to the users.

The general function of financial institutions is to facilitate the

2 transfer of funds from the savers to the users.

For highly developed economies, certain barriers are created by

3 individuals in the transfer of funds; risk, inconvenience and cost of

transfer, and the desire to avoid liquidity.
FUNCTIONS OF FINANCIAL
INSTITUTIONS
 DEVELOPMENT OF THE PHILIPPINE
FINANCIAL SYSTEM

Obras Pias (Pious Works)

The first credit institution, known as Obras Pias, was founded in 1754 by Father Juan
Fernandez de Leon.
The initial capital came from pious Catholics and individuals who left their money to the
Church before embarking on risky sea expeditions.

The institution operated by investing its funds in commercial ventures, specifically financing
the Galleon Trade. The profits generated were then used for charitable activities.
Obras Pias were later managed by friars and eventually evolved into the country's first
commercial banks and marine insurance companies.
 DEVELOPMENT OF THE PHILIPPINE
FINANCIAL SYSTEM

Banco Espanol-Filipino de Isabela II.

The first Philippine bank, Banco Español-Filipino de Isabela II, was established in 1851 to
handle domestic transactions.
The bank's business expanded significantly after the opening of the Suez Canal in 1869,
which facilitated trade with Europe and led the bank to fund export crops.

This growth in international trade attracted foreign capital, leading to the establishment of
branches of the Chartered Bank of India, Australia, and China in 1873 and the Hong Kong and
Shanghai Bank in 1875.
Both foreign banks later opened branches in Iloilo to finance the burgeoning sugar industry.
 DEVELOPMENT OF THE
PHILIPPINE FINANCIAL
SYSTEM
Monte de Piedad
In the case of Spain, it was able to put up the first savings bank in 1882 despite British
domination in the banking industry.
Its funds came from the obras pias. One year later, another Spanish bank, Banco Peninsula
de Ultramirano, set up a branch in Manila.
 DEVELOPMENT OF THE
PHILIPPINE FINANCIAL SYSTEM

Financial institutions during American rule

In the early 1900s, American economic influence in the Philippines grew significantly, even though
their initial business presence was weaker than that of the British and Chinese.
This was largely due to the Payne-Aldrich Act of 1902, which established "free trade," and the
weakening of British commercial activities during World War I.

American banks, like the International Banking Corporation of New York, which was later acquired by the
National City Bank of New York, played a key role in expanding U.S. business interests.
By the 1920s, other banks, including the Philippine National Bank (PNB), the Chinese-owned China Banking
Corporation, and the Mercantile Bank of China, had also been established, creating a more diverse banking
landscape.
However, during the Japanese occupation in 1942, the PNB was forced to reopen under Japanese supervision,
and the printing of war notes by the Japanese Southern Development Bank led to severe inflation.
 DEVELOPMENT OF THE
PHILIPPINE FINANCIAL SYSTEM

POSTWAR FINANCIAL INSTITUTIONS

In 1946, the Rehabilitation Finance Corporations was established to provide credit facilities for
the rehabilitation of agriculture, commerce, and industry, and the reconstruction of war-damaged
properties. Some years later, it became the Development Bank of the Philippines.

Another very important milestone in the development of the Philippine financial system during
this particular period was the creation of the Central Bank of the Philippines in 1948. Its
operations, however started the following year.
 The Structure of the Philippine
Financial System

Bangko Sentral ng Pilipinas

The Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the Philippines. It
was established on 3 July 1993 pursuant to the provisions of the 1987 Philippine Constitution and
the New Central Bank Act of 1993. The primary objective of the Bangko Sentral is to maintain
price stability conducive to a balanced and sustainable growth of the economy and employment.
The financial system is broadly categorized into two main sectors:

Banks

Non-Bank Financial Institutions (NBFIs)

 Banks
Universal Bank Commercial Bank Thrift Bank
a type of bank which a financial institution that also known as savings and
participates in many kinds of accepts deposits from the loans associations (S&Ls), or
banking activities and is both public and gives loans to its simply thrifts, are financial
a commercial bank and an clients for the purposes of institutions primarily funded by
investment bank as well as consumption and investment consumer deposits. A thrift
providing other financial to make a profit. specializes in offering savings
services such as insurance. accounts and originating home
mortgages for consumers.
 Banks

Cooperative Bank Rural Bank Islamic Bank

is a system of finance that Digital Bank
is one which is organized, can be definedadheres
as rural to Sharia law, which of finance that
is a system refers to the digitization of all
owned and controlled by financial institution/ adheres to Sharia law, which traditional banking services,
advocates profit-sharing
cooperative organizations, cooperative/ community advocates profit-sharing processes, and activities.
while prohibiting the Customers can access these
for the purpose of providing bank or deposit taking MFI while prohibiting the
financial and credit services
collection and payment
that provides customised of
collection and payment of services through online channels
to cooperatives and their interest.
financial services to rural interest. such as mobile apps, websites,
communities. and other digital platforms.
members.
 Non-Bank Financial Institutions
(NBFIs)

Government NBFI Private NBFI

a financial entity, owned or

financial institutions owned
controlled by the government,
by private individuals or
that provides financial services
but doesn't hold a full banking corporations. Their primary
license, meaning it cannot goal is to make a profit by
accept public deposits like a providing specialized
traditional bank. financial services.
Thank
You