Non-Bank Financial Institutions. Types and Functions

By Dima, Cristian; Corches, Radita | Contemporary Readings in Law and Social Justice, July 1, 2013 | Go to article overview

Non-Bank Financial Institutions. Types and Functions


Dima, Cristian, Corches, Radita, Contemporary Readings in Law and Social Justice


ABSTRACT.

The paper describes the main types of non-bank financial institutions and their field of activity, underlining the role and common functions for all types. Whether credit unions, pawnshops, finance companies, credit societies or pension funds, they all sell credits to people, on different basis.

Keywords: non-bank financial institutions, types, functions, role

1. Types of Non-Bank Financial Institutions

Non-bank financial institutions include pawnshops, credit unions, mutual credit societies, insurance companies, pension funds, finance companies and other types of activity, depending on the country. Pawnshops are lending institutions, referring to loans secured by personal property. Historically, they have emerged as a private enterprise usurious loan. Under current conditions in many countries, capital formation and operation of pawnshops are governed by laws and include state participation. Depending on the degree of the state participation and that of private capital, pawnshops are of state or municipal, private, and of mixed type. Pawn shops specialize in providing consumer credit secured by a pledge of movable property, based on operations of customer's values storage and sale of mortgaged property on a commission basis. The special feature of credit operations in pawnshops is the lack of the credit agreement with the client and encumbrances. In granting loans against mortgage a customer gets a ticket, as a rule, to the bearer, having registration number in the log file, which specifies the details of the borrower and the basic terms of the transaction. For most credit transactions the period of time stipulated is quite long and only its termination, the mortgaged property may be sold.

Credit unions are credit and settlement services for members of a union, cooperatives, rental companies, small and medium-sized businesses, and individuals. Capital credit unions are based on the purchase of shares and the mandatory nonrefundable entry fee payment and provide loans, commissions and brokerage operations. They are also credit cooperatives, organized groups of individuals or small credit institutions, which may be an organized group of individuals united within a profession, or a number of voluntary associations of independent credit unions. Credit unions perform operations such as attracting deposits, loans secured by members of the union, bill discounting, trade commissions and brokerage operations, consulting and auditing services.

Mutual Credit Society is a kind of credit institution that is similar in nature to commercial banks that serve small and medium businesses. Participants in mutual credit societies that are formed by entry fees capital may be individuals or legal entities. When a member joins the mutual credit a certain percentage of open credit is accessible as payment shares, the person remaining liable for his/her debts, as well as operations of the Company in the open credit. Insurance companies rely on the insurance policies taken from the public savings in the form of regular contributions, which are then placed in government and corporate securities, mortgages for residential buildings. Regular flow of contributions, interest income on bonds and dividends on shares held by insurance companies, provides a stable and large accumulation of financial reserves. Insurance companies may be organized as a joint stock company or a mutual company. In the latter case, the owners of insurance policies are co-owners of the company, the accumulated contributions of the owner of the insurance policy are considered as own share in the mutual company.

Private pension funds are legally independent companies, managed by insurance companies or trust departments of commercial banks. Their sources are formed on the basis of regular contributions and deductions working firm established a pension fund, as well as income in the Fund securities. Pension funds invest in the most profitable types of private securities, government bonds, and real estate. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Non-Bank Financial Institutions. Types and Functions
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.