Financial systems and development

Definitions and data notes
Financial terms
surance companies, and similar institutions that
collect long-term savings on a contractual basis.
* Banks. Financial institutions that accept funds, * Curb market. An unofficial money and capital
principally in the form of deposits repayable on market.
demand or at short notice (such as demand, time, * Development finance institutions (DFIs). Finanand
savings deposits). Under the general rubric cial intermediaries that emphasize the provision of
"banks" come: commercial banks, which engage capital (loans and equity) for development. DFIs
only in deposit taking and short- and medium- may specialize in particular sectors-for example,
term lending; investment banks, which handle se- industry, agriculture, or housing. Although most
curities trading and underwriting; housing banks, provide only medium- and long-term capital,
which provide housing finance; and so on. In some, particularly those that specialize in agriculsome
countries there are universal banks, which ture, also provide short-term finance.
combine commercial banking with investment * Discount. A reduction from the face value of a
banking and sometimes with insurance services. financial contract.
* Capital market. The market in which long-term * Equity finance. The provision of finance in a
financial instruments, such as equities and bonds, form that entitles its owner to share in the profits
are raised and traded.
and net worth of the enterprise.
* Commercial bills. Short-term debt instruments * Eurocurrency market. A market in which assets
that are used mainly to finance trade. Examples are and liabilities denominated in a particular currency
promissory notes, by which debtors commit them- are held outside the country of that currency.
selves to pay to creditors or to their order a stated * Financial savings. The portion of total wealth
sum at a specified date, and bills of exchange, held in the form of financial assets.
which are drawn up by creditors and accepted by * Foreign portfolio investment. Investment by fordebtors.
Commercial bills that are also accepted by eign residents in domestic capital markets, without
banks are known as bank acceptances. Promissory the investors' provision of technology and mannotes
issued by large corporations to meet their agement services that usually occurs with foreign
general financial needs are known as commercial direct investment.
paper.
* Forward contract. An agreement to purchase or
* Contractual savings institutions. Occupational sell at a future date a fixed amount of commodities
pension funds, national provident funds, life in- or securities at a preset price.
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