Lesson 3: Financial Institutions
and Financial Markets
Subject: Business Finance
Grade 12 ABM Strand
Prepared by: Aries S. Marcellana
PRAYER
Lesson 3: Financial Institutions
and Financial Markets
Subject: Business Finance
Grade 12 ABM Strand
Prepared by: Aries S. Marcellana
Learning Objectives
Identify types of financial institutions and markets.
Explain their functions and importance.
Create a visual map showing their connections.
Activity
Directions: Guess
the Institution
Lesson 3: Financial Institutions
and Financial Markets
Subject: Business Finance
Grade 12 ABM Strand
Prepared by: Aries S. Marcellana
What are Financial
Institutions?
are organizations that primarily
manage, invest, and protect money
on behalf of their clients and
members.
Financial
Institutions They play a crucial role in the
economy by acting as intermediaries
between savers and borrowers,
facilitating the flow of capital and
supporting economic growth
Key functions and roles include:
1 2 3 4 5
Accepting Providing Managing Facilitating Managing
deposits loans investments payments risk
Lesson 3: Financial Institutions
and Financial Markets
Subject: Business Finance
Grade 12 ABM Strand
Prepared by: Aries S. Marcellana
Types of
Financial Commercial Investment
Banks Banks
Institutions
Insurance
Cooperatives
Companies
Government
Financial
Institutions
(GFIs)
Commercial Banks
These institutions offer the widest variety of banking services,
including deposit accounts, loans, foreign exchange services, and
credit cards, to individuals and businesses.
They are profit-based and privately owned, though some
government-owned banks also have commercial banking licenses.
Examples: BDO Unibank, Inc., Bank of the Philippine Islands (BPI),
Metropolitan Bank & Trust Company (Metrobank), Security Bank
Corporation, Philippine National Bank (PNB).
Investment Banks
Investment banks specialize in capital raising activities, mergers and
acquisitions (M&A), and the trading of securities for large
corporations and institutional investors.
They often act as advisors and intermediaries rather than taking
deposits.
Examples: BPI Capital Corporation, First Metro Investment
Corporation, SB Capital Investment Corporation, Investment &
Capital Corporation of the Philippines.
Insurance Companies
These non-bank financial institutions protect against financial risks
through various insurance policies and invest the premiums
collected from policyholders.
They are regulated by the Insurance Commission.
Examples: Philam Life, Manulife Investment Management and Trust
Corporation, Sun Life Investment Management and Trust
Corporation
Financial cooperatives (including cooperative banks
and credit unions) are owned and managed by their
members, primarily offering deposit and loan services
to those members at cost-effective rates.
They are regulated by the BSP and the Cooperative
Cooperatives Development Authority (CDA).
Examples: Metro South Cooperative Bank, First
Isabela Cooperative Bank, Ilocos Consolidated
Cooperative Bank
Government Financial Institutions (GFIs)
GFIs are government-owned or controlled corporations that provide a
range of financial services, often with a specific mandate to support
national development goals such as agriculture, small and medium
enterprises, and housing.
Examples: Land Bank of the Philippines, Development Bank of the
Philippines (DBP), Government Service Insurance System (GSIS),
Social Security System (SSS).
What are Financial Markets?
Financial Markets
are marketplaces where buyers and sellers exchange financial
instruments like stocks, bonds, commodities, and currencies.
They function as a platform for channeling funds from those who
have capital to those who need it, helping to facilitate
investments, manage risk, and promote economic growth.
Types of Financial Markets in the Philippines
Money Market (Short- Capital Market (Long-
term) term)
Derivative Market
Forex Market
(Contracts and
(Currency Exchange)
futures)
- deals with short-term debt
Money instruments (with maturities of
less than one year) and is a
Market crucial source of liquidity for
(Short- the economy. Participants
include the government,
term) corporations, and financial
institutions.
- The capital market facilitates
the issuing and trading of long-
term debt and equity
Capital Market
instruments (with maturities of
(Long-term)
more than one year) to raise
funds for long-term
investments and expansion.
- The Foreign Exchange
(Forex) market is where
Forex currencies are traded,
Market
allowing for the
(Currency
Exchange) exchange of the
Philippine Peso with
other currencies.
- The derivatives market
Derivatives involves trading contracts
Market whose value is derived from
(Contracts and an underlying asset (such
Futures)
as stocks, bonds, or
commodities).
Relationship Between Institutions and
Markets
Investor
Financial
Business
Institution
Financial
Market
Activity Title: Financial
Map Challenge
Objective:
• Students will create a concept
map showing the relationships
among Investors, Financial
Institutions, Financial Markets,
and Businesses, including
examples and functions.
Instructions for
Groups:
1. Form Groups: Divide the class into
small groups (3–5 members).
2. Prepare Materials: Use a large sheet
of paper, markers, or digital tools
•(e.g., PowerPoint, Canva, or
MindMeister).
3. Start with Core Nodes:
•Place the four main elements:
Investors → Financial Institutions →
Financial Markets → Businesses
Instructions for Groups:
Add Connections:
•Draw arrows to show the flow of funds and interactions.
•Label each arrow with the type of transaction or role
(e.g., “Deposits,” “Loans,” “Investments”).
•Include Examples:
•Under each node, add at least 3 examples
(e.g., BDO under Commercial Banks, PSE under Capital
Market).
Instructions for Groups:
•Show Functions:
•Briefly note the key function of each element (e.g., “Financial
Institutions: Intermediaries
•between savers and borrowers”).
•Enhance Creativity:
•Use colors, icons, and shapes to make the map visually
appealing.
•Time Limit:
•Complete the map in 15–20 minutes.
•Presentation:
•Each group will present its concept map for 3 minutes.