Financial Institution and Monetary Policy

Financial Institutions Financial institutions are either private or government owned organizations that operates as a channel between the borrowers and savers of funds. One of the main functions of financial institutions is to provide the financing that boosts the economic development of a nation. For instance, a stable financial system accommodates the flow of funds between investors and savers. However an instable financial system occurs when there's a disruption in this process causing a distortion in the real economy. In this globalised era, there are various financial institutions due to the advancement in technology and discoveries. According to the RBA, there are three main types of financial system in Australia. They are; authorized deposit taking institutes (ADIs), non-authorized deposit taking institutes, insurers and fund managers. Where else, UK's main financial institutions are classified into deposit taking institutes (ADIs) and non-deposit taking institutions (NTDIs).
Non-Deposit Taking Institutions (NDTI) Non deposit taking institutions are financial intermediaries that are not permitted to accept deposits but they are enable to pool the payments of many people in forms like premiums or contributions and either invest it or provide credit to others. Examples of these NDTIs are fund management, insurance companies, investment banks, finance companies and retirement funds.
Fund Management Usually fund management institutions in Australia are commonly known as common funds, public unit trusts, hedge funds, cash management trusts and friendly societies. On the other hand, in the UK, fund management consists of asset managers and are usually consist of hedge funds, open-ended investment companies, unit trust and investment trust. In general, fund managers receive funds from investors and these funds are invested in various asset securities on their behalf. The industry of fund management in Australia held assets worth A$1 855 510 million