Vocabulary notes

to meet debts phr - покрывать долги

if worse comes to worst phr - в самом худшем случае

to go down the tubes = to go bust = to go down the pan = to go to the wall = to go under = to go broke = to go bankrupt phr – обанкротиться, разориться

patient adj - терпеливый

share price n - курс акций

bad debts n - безнадёжные долги; просроченные ссуды

rickshaw n- рикша

to escape v - (зд) бежать, спасаться

securities company n - инвестиционная компания

to stall v - «держать в узде»

6. Write an essay on one of the following themes:

1. Debt versus Equity Financing

2. The Goal of Financial Management and the Responsibilities of

Financial Managers

UNIT 7

I text banking institutions

“If you owe a bank a hundred dollars, you have a

problem. If you owe it a million dollars, it has a

problem!” – John Maynard Keynes

The history of banking is nearly as old as civilization. Ancient writers often mentioned money-changers and moneylenders. These were men who bought the money of other countries and gave local coins in return. They had strongboxes in which to keep the money. People eventually began to leave their own coins with the money-changers to be kept in the strongboxes for safekeeping. Thus, the earliest banking was that of deposit and safekeeping. The beginning of modern banking is usually placed in the year 1587, when the Banco di Rialto was established in Venice, Italy. The term banking comes from the Italian word banco, meaning bench (early Italian bankers carried on their business at a bench in a street). Nowadays, no matter where in the world you live, work, or travel, you’ll find that a banking system has developed to provide individuals and businesses with a wide range of financial services.

Modern Banking Institutions

Traditionally, financial institutions have been classified into depository institutions – institutions that accept deposits that customers can withdraw on demand – and nondepository institutions. Examples of depository institutions include commercial banks, savings banks, and credit unions.

Saving banks are also called savings and loan associations (S&Ls), or thrifts. They offer savings accounts and specialize in mortgage lending. A credit union is a financial institution owned and controlled by its depositors, who usually have a common employer, profession, trade group, or religion. Credit unions are designed to serve consumers, not businesses.

Nondepository institutions include life insurance companies, pension funds, and finance companies. Insurance companies are businesses that protect their clients against financial losses from certain risks in exchange for a fee, called a premium. Pension funds specialize in managing funds that people save for retirement. Finance companies specialize in making loans to relatively high-risk individuals and businesses. They offer short-term loans at substantially higher rates of interest than banks.

All financial institutions of a country are supervised by the country’s central bank. Central banks, such as the Federal Reserve System (the FED) in the United States, the Bundesbank in Germany, the Bank of Japan, and the Central Bank of Russia control the country’s banking system. The majority of the bank cash reserves of a country are held by central banks which perform numerous monetary services for their government. Central banks issue bank notes, supply currency and clear checks, regulate the supply of money, fix minimum interest rate, influence exchange rates, and serve as a depository for the federal government.