Page 538 - Introduction to Business

512 PART 5 Finance

Careers in the Financial System

Job opportunities in the financial system can be found in financial institutions and
regulatory agencies. Private financial institutions offer a wide variety of career
opportunities. Because their customers are extremely diverse, they need to hire
people with all kinds of different professional skills. A wide variety of jobs are avail-
able in banks, thrifts, insurance companies, pension funds, and investment com-
panies. Jobs in the public financial sector are available in a number of regulatory
agencies, including the Federal Reserve System, Federal Deposit Insurance Corpo-
ration, Comptroller of the Currency, Securities Exchange Commission, and state-
level banking, securities, and insurance regulatory bodies.
Most financial careers require good accounting skills as a prerequisite. Also, a
general business studies education is essential to be able to understand how busi-
nesses work and to communicate with customers from various types of business
enterprises. Most institutional managers require analytical and mathematical skills
obtained in finance studies, not to mention interpersonal skills to work effectively
with others. Because it is difficult to gain in-depth expertise in all areas of finance,
it is important to work in teams many times. Also, because financial institutions are
private firms, jobs are available in management, marketing, computer, and other
traditional business disciplines.
Finance professionals regularly point out that helping businesses grow and
prosper through meeting their financial needs is a rewarding experience. Also,
many bankers, insurance agents, pension managers, investment analysts, financial
advisors, and securities brokers are well respected due to their valuable contribu-
tions to improving business, education, and public service in their communities.

Summary

LEARNING OBJECTIVE 1
Financial systems can be classified as market-oriented
Define the components of financial systems and as in the United States, or bank-centered, as in
understand the benefits of financial intermediation.
Germany and Japan. In both cases government
Financial systems are composed of financial regulation plays an important role in maintaining
instruments (bonds and stocks), financial markets the safety and soundness of the financial system.
(money and capital markets as well as organized and During the Great Depression, the failures of large
over-the-counter markets), and financial institutions numbers of banks and other financial institutions
(depository and nondepository institutions). In substantially worsened the economic downturn.
financial systems, savings are channeled to investments Deposit runs on banks due to widespread panic by the
via financial intermediation. In this process, allocative public was a terrible episode that affected countries
efficiency, operational efficiency, and market efficiency around the world. Over the past two decades, financial
can lead to greater productivity in the economy. Of crises have broken out in Japan, Mexico, Russia,
course, higher productivity in the business sector Finland, Sweden, Turkey, Argentina, and a number of
means more jobs, higher wages, greater wealth, and a emerging Asian countries. National government, as well
higher standard of living for citizens of a country. as international agencies such as the International
Monetary Fund and the World Bank, can play a vital role
LEARNING OBJECTIVE 2 in preventing or diminishing the negative effects of
Contrast different kinds of financial systems around financial crises. The goal is to limit permanent damage
the world and state how regulation can protect the to a country’s economy and foster recovery and steady
safety and soundness of financial systems. growth.

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