Lesson Notes By Weeks and Term - Senior Secondary 1

Financial institution

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Term: 3rd Term

Week: 3

Class: Senior Secondary School 1

Age: 15 years

Duration: 40 minutes of 2 periods each

Date:       

Subject:      Economics

Topic:-       Financial Institution

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

  1. Define financial system
  2. State the functions of the financial system
  3. Discuss the components of the financial system

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

PRESENTATION

TEACHER’S ACTIVITY

STUDENT’S ACTIVITY

STEP 1

INTRODUCTION

The teacher reviews the previous lesson on Mining

Students pay attention

STEP 2

EXPLANATION

She explains the meaning of financial system. She states the functions of the financial system

Students pay attention and participates

STEP 3

DEMONSTRATION

She discusses the components of the financial system

Students pay attention and participate

STEP 4

NOTE TAKING

The teacher writes a summarized note on the board

The students copy the note in their books

 

NOTE

FINANCIAL SYSTEM

A financial system refers to a system which enables the transfer of money between investors and borrowers.

A financial system is a network of financial institutions, financial markets, financial instruments and financial services to facilitate the transfer of funds. The system consists of savers, intermediaries, instruments and the ultimate user of funds. The level of economic growth largely depends upon and is facilitated by the state of financial system prevailing in the economy.

 

FUNCTIONS OF FINANCIAL SYSTEM

  1. Pooling of Funds: In a financial system, the Savings of people are transferred from households to business organizations. With this, production increases and better goods are manufactured, which increases the standard of living of people.

 

  1. Capital Formation: Business require finance. These are made available through banks, households and different financial institutions. They mobilize savings which leads to Capital Formation.

 

  1. Facilitates Payment: The financial system offers convenient modes of payment for goods and services. New methods of payments like credit cards, debit cards, cheques, etc. facilitates quick and easy transactions.
  2. Provides Liquidity: In financial system, liquidity means the ability to convert into cash. The financial market provides the investors the opportunity to liquidate their investments, which are in instruments like shares, debentures, bonds, etc.

 

  1. Short and Long Term NeedsThe financial market takes into account the various needs of different individuals and organizations. This facilitates optimum use of finances for productive purposes.

 

COMPONENTS OF FINANCIAL SYSTEM

  1. Financial Institutions

Financial institutions (commercial banks, investment banks, brokerage firms, insurance companies, and asset management funds.) facilitate smooth working of the financial system by making investors and borrowers meet. They mobilize the savings of investors either directly or indirectly via financial markets, by making use of different financial instruments

  1. Financial Markets

A financial market (Stock market, bond market) is the place where financial assets are created or transferred. It can be broadly categorized into money markets and capital markets. Money market handles short-term financial assets (less than a year) whereas capital markets take care of those financial assets that have maturity period of more than a year. 

  1. Financial Instruments

This is an important component of financial system. The products which are traded in a financial market are financial assets, securities or other types of financial instruments. There is a wide range of securities in the markets since the needs of investors and credit seekers are different. 

Equity shares, debentures, bonds, etc are some examples.

  1. Money:

Money considered as anything which accepted for payment of products and services or for repayment of the loan. Above all, It is a medium of exchange and acts as a reservoir of value.

 

  1. Financial services:

These include services provided by Asset Management and Liability Management Companies. They help in obtaining the necessary funds and also ensure that they deployed efficiently. They help in borrowing, selling and purchasing securities, lending and investing, making payments and settlements and caring for risks in the financial markets.

EVALUATION:    1. Define financial system

  1. State three functions of the financial system
  2. Highlight the components of the financial system

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively