How_Money_Works_-_The_Facts_Visually_Explained

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PROFIT-MAKING AND FINANCIAL INSTITUTIONS

Financial institutions 7170

Invests cash from deposits

and interest payments

Profits from brokerage and

$ corporate advisory roles

$

$

$

$

$ $

Financial

institutions

Enables individuals

or companies to

buy or sell financial

instruments. Brings

buyers and sellers

together, matching them

so that a trade can take

place. Se e pp.76−7 7

Provides financial

services to

businesses and deals

in large transactions,

providing loans,

mortgages, and

savings products.

See pp.72−73

Underwrites

businesses and new

share issues, brings

companies to

market, arranges

mergers, and offers

corporate brokerage

services. See pp.74−75

Insurance

company

Brokerage

Commercial

bank

Investment

$ Bank

BROKER

COMPANY

$

$ $ $

INTEREST

ON LOANS

LOANS AND

MORTGAGES

MONEY GOES

TO COMPANY

BONDS SOLD

TO PUBLIC

COMMISSION

TO BROKER

$

BOND

A

BOND

A

INTERRELATED INSTITUTIONS

IN

VESTMENT

The worldwide markets are all interconnected and

rely on each other. A shock in one market can

have an adverse effect in another.

❯❯ When Greece was renegotiating

its debt write-off the European stock markets

were negatively affected, especially when it

seemed as if Greece might leave the euro.

❯❯Fears that the Chinese economy was slowing

down fed into fears about global market growth.

❯❯The result of the Brexit vote in 2016 led

to a sharp drop in the value of the pound.

$ 639

billion

value of Lehman Brothers

investment bank when it

filed for bankruptcy in 2008

US_070-071_OV_How_financial_instituations_make.indd 71 13/10/2016 16:17