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Finance for business

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UNIT 4: FINANCE FOR BUSINESS Task: 1 Financial institutions and their role within the UK Economy High Street Banks These organisations can be seen on the most high streets. Their purpose is to supply a financial service to both the public and business organisations. Banks are public limited companies with their shares quoted on the stock exchange. Their aim is to make profit which will be distributed to their shareholders. Banks play a very important role in our lives. Banks help us in buying houses and the nice, expensive cars we drive, without banks it would be very difficult to buy and live in expensive houses. Banks provide financial services to people and businesses. For example if we think about starting up a business, we will need banks financial support if we haven't got the full amount of money. They provide services for the convenient and safe flow of money in the economy. Their role in the economy today is to provide customers with full range of products and services which include: current accounts, deposit accounts, standing orders and direct debits, overdrafts, insurance, loans, mortgages, debits and credits cards and much more. We use these banks facilities in our daily lives, for example to withdraw money when needed or to deposit money to save money in the bank. ...read more.


People are having problems because they now have less to spend and there is a rise in interest rates, so for instance if they borrow money, they will have to pay a lot more back. Just imagine if there were no banks our economy will collapse, new businesses will be less likely to survive and start up, and people will have difficulties in buying homes and cars. This also could cause loss of employment opportunities and a reduction in amount of products and services available for people to buy. Therefore we cannot survive without banks, we rely on banks to provide us with financial support, banks also support business, so that they can survive in the economy by providing them with loans and help them grow and succeed. Banks enable us to store money safely and we also earn interest on our saved amount of money which is beneficial in a lot of ways. Because of banks we have a safe future, we are able to get a credit from bank to buy houses, car and use overdraft facilities, which can again help us a lot in our daily lives, and we can take money out of the bank in an emergency without worrying about having money in our bank accounts. ...read more.


As a primary market, the Stock Exchange will liaise with investment banks and businesses that are looking to raise capital by selling shares. This process involves the business being 'listed' on the Stock Exchange or 'floating'. In this case, the business will effectively get its capital through the initial sale of its shares. Much of the Stock Exchange's work, however, is as a secondary market. People buying shares may wish to do so for a variety of reasons - to secure dividends or to see the price of the shares rise, for example. If people wish to sell shares then it would be very inconvenient for the business itself to take the shares back and then sell them on to someone else. Such a process would be extremely disruptive and not help planning. The Stock Exchange, therefore, acts as a market that puts those wanting to sell shares in touch with those seeking to buy - effectively the Stock Exchange is a market for second hand shares! To facilitate this process the market has Two main 'players' . The modern Stock Exchange operates through computer based trading. Both stockbrokers and market makers need access to high quality information and ICT facilities make this much easier. The Impact of Stock Exchange on UK European Central Bank - =The European Investment Bank is the largest financial institution in the world. It gives loans for regional development particularly in the less developed areas of Europe. ...read more.

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