financial market and institutions pdf

Financial Market And Institutions Pdf

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A financial market is a market in which people trade financial securities and derivatives at low transaction costs.

Overview of International Financial Institutions (IFIs)

In many parts of the world, international financial institutions IFIs play a major role in the social and economic development programs of nations with developing or transitional economies.

This role includes advising on development projects, funding them and assisting in their implementation. Characterized by AAA-credit ratings and a broad membership of borrowing and donor countries, each of these institutions operates independently.

All however, share the following goals and objectives:. IFIs achieve these objectives through loans, credits and grants to national governments. Such funding is usually tied to specific projects that focus on economic and socially sustainable development.

IFIs also provide technical and advisory assistance to their borrowers and conduct extensive research on development issues. In addition to these public procurement opportunities, in which multilateral financing is delivered to a national government for the implementation of a project or program, IFIs are increasingly lending directly to non-sovereign guaranteed NSG actors.

These include sub-national government entities, as well as the private sector. Canada is a partner and shareholder in the World Bank, which is the major global IFI, and in several regional development banks. This membership permits Canadian firms and individuals to compete for procurement opportunities in bank-funded projects and programs. During recent years, IFIs have made considerable progress in harmonizing the way they procure goods and services.

In many cases, they are now using similar policies and procedures, although the interpretation of these approaches may still vary at the level of the individual institution. In the sections that follow, we'll look at the common features of IFI procurement and how it works. Skip directly to the section on:. All IFIs use country strategy documents, as these are fundamental to establishing an IFI's lending priorities for a particular country.

Based on the country's own vision for its long-term development and written by the IFI, the document lays out the IFI's support program for the nation.

A country strategy begins by analyzing the causes of poverty within the population and identifying key areas where the IFI's assistance can reduce it most effectively. This establishes a foundation for the IFI's future activities in the country, which can range across the entire spectrum of economic and social needs. The development of the country strategy involves extensive discussions with many stakeholders, including government authorities, representatives of civil society, non-government organizations, development agencies and the private sector.

These discussions are crucial to the success of the strategy because they promote collaboration and coordination among the various national partners. However, all borrowers must follow the IFI's rules and procedures throughout the entire project cycle. The project cycle, which has similar stages for all IFIs, is the framework for the design, preparation, implementation, completion and evaluation of a project. Business opportunities occur throughout the cycle, so becoming familiar with it will increase your chances of identifying an opportunity and securing a contract.

You should be aware, though, that project cycles can often last for several years, so being involved in a project from start to finish can require a substantial long-term investment on your part. However, the smaller components within a given project cycle can provide many shorter-term opportunities. The IFI and the borrowing country identify projects that are appropriate for the country's development strategy and suitable for IFI support.

Pre-feasibility studies are often required at this stage. Once a proposed project has entered the project pipeline, the borrower and IFI technical staff study and define it further.

The actual design and preparation of the project are the borrowing country's responsibility. IFI staff conduct in-depth assessments of the technical, financial and economic elements of the project.

The appraisal phase is the IFI's responsibility and culminates in a project plan. The IFI and the borrower negotiate the funding agreement and the project implementation plans. Negotiations result in a loan or funding document that is presented to the appropriate IFI board s for approval. The funding becomes effective after board approval and after the country has signed the documents.

Funds can now be disbursed, thus commencing the implementation stage of the project. Implementation of the project, including procurement, is the responsibility of the borrower and is carried out with minimal IFI assistance. However, the IFI does oversee all major procurement decisions made by the borrower. Most of the funds are spent during this phase, which provides the bulk of the procurement opportunities for contractors.

This final phase is an assessment of the project and of the results achieved. It is performed after the project has been completed and all funds have been disbursed. Before you pursue a contract related to an IFI-funded project, be sure you understand the respective responsibilities of the IFI and the project's executing agency.

The IFI and the executing agency do share some of the work of project preparation but the executing agency is responsible for all phases of project execution and procurement, which must comply with IFI regulations. These regulations and their related procedures are similar for all IFIs. The best sources of project information are contacts, partners and IFI staff in the donor and borrowing countries. Often, however, project-related documents, procurement notices and contract awards are available as well on IFI websites.

Reviewing this information in the context of the country strategy document will help you monitor the progress of active projects and assess future developments and therefore opportunities in the borrowing country. Procurement notices represent the actual business opportunities in IFI-financed projects. These are generally posted on the IFI's website, and on independent websites that consolidate project information from major IFIs, UN agencies and foreign governments.

These websites offer advanced search features and some will automatically notify you of opportunities that match your interests. Some are by subscription only, but most are free. For the procurement of goods, equipment, civil works and non-consulting services such as transportation and maintenance, most opportunities occur during the implementation stage of the project. Most IFIs require the borrower to draft a procurement plan, which states in general terms what products and services will be needed, when they will be required, their approximate costs and the procurement methods to be used.

The procurement plan is published on the IFI's website and is updated regularly. The objective of ICB is to provide all eligible firms with timely notification so that they all have an equal opportunity to bid. Borrowers must issue bid invitations or prequalification invitations in at least one local publication and in UN Development Business Online. In some cases, invitations will also appear on the IFI's website. Before bidding, always familiarize yourself with the procurement guidelines of the IFI that is providing the loan.

These guidelines define the policies, procedures and procurement methods that have been agreed on by the borrower and the IFI. Be aware, however, that the relationship between the supplier you and the borrower is governed by the bidding documents and your contract with the borrower, not by the IFI's procurement guidelines.

All firms that prequalify by meeting the specified criteria for eligibility, financial capacity and experience are then invited to bid. Interested firms can obtain bidding documents from the borrower. These documents contain:. Contracts are awarded to the lowest-evaluated bid, based on the evaluation criteria. Additionally, a margin of preference may be granted to bidders from the borrowing country, or for manufactured goods with a minimum percentage of domestic content.

When ICB is not the most appropriate method, other methods may be used; among these are national competitive bidding NCB , shopping and direct contracting. The option chosen will depend on the scope, nature and complexity of the contract in question. NCB is considered the appropriate method for contracts that are not expected to attract foreign bidders. Invitations for such bidding may be limited to domestic publications, and bidding documents may be only in the national language.

However, the process is not restricted to domestic firms; if foreign companies want to bid, they can do so. IFIs use the term "consultant" for a wide variety of public and private entities that provide consulting services. These include consulting firms, engineering firms, management firms, procurement agents, auditors, commercial banks, universities, research institutions, governmental agencies, NGOs and individuals.

Note that IFIs distinguish consulting services from non-consulting services such as maintenance, the latter being procured in the same way as goods and equipment. Opportunities for consultants occur during most of the project cycle. The following list provides some examples and the points at which they occur:. Technical and financial proposals may be requested at that time, but will be evaluated separately using a two-envelope system, in which the financial proposals are opened only after the technical scores have been assessed.

Before submitting an EOI, always familiarize yourself with the selection guidelines of the IFI that is disbursing the loan. These guidelines define the policies, procedures and selection methods that have been agreed on by the borrower and the IFI.

Be aware, however, that the relationship between the supplier you and the borrower is governed by the RFP and the contract, not by the IFI's procurement guidelines.

The heaviest emphasis in selecting a consultant is on the quality of the services to be provided, and the most common selection method is Quality- and Cost-Based Selection QCBS. The weight given to quality and cost will depend on the complexity and nature of the assignment although it is usually around 80 percent for quality and 20 percent for cost. In QBS, technical proposals are submitted for evaluation first, and financial proposals submitted only after the technical evaluation has taken place.

IFIs also generate business opportunities through corporate or institutional procurement, when they purchase goods or services for their own internal needs.

They buy a wide variety of goods and services including:. IFIs also hire a broad variety of individual consultants and consultancy firms to provide technical expertise that they do not have in-house. Some IFIs have developed electronic notification and procurement systems for their corporate procurement, which enables potential suppliers to receive notifications, express their interest and bid electronically. Most IFIs require suppliers and consultants to register as a vendor. In recognizing the important role of the private sector to catalyze positive economic development, the IFIs have in recent years, increased their focus on direct financial lending to the private sector.

IFIs offer this lending through a variety of financial instruments including direct financing and private equities, as well as other innovative financing mechanisms. These opportunities are typically identified and supported through distinct private sector units found within the respective IFI, whose main objective is to oversee the developmental impact of the financing.

Typically, the bulk of private sector lending at the IFIs is channelled towards infrastructure projects including those in the energy, power, transport, telecommunications, and water sectors. IFIs complement their resources through trust funds. These funds are financial and administrative arrangements with external donors, and are intended to finance high-priority development needs such as research, technical assistance, advisory services, debt relief and post-conflict transition.

The funds come from donor countries, foundations, the private sector and sometimes the IFI's own grant resources. Until recently, many consultant trust funds CTFs were donor-based and tied, which meant that they could only be used to hire consultants who were nationals of the donor country. Currently, however, almost all IFIs have phased out tied trust funds or are doing so. Most new trust funds are untied, are sector- or theme-specific, and are either multi- or single-donor funds.

Their main purpose is to advance international development by providing targeted grants for key strategic needs. For Canadian consultants, the loss of the tied Canadian CTFs is far outweighed by the dramatic increase in the number of funds they can access worldwide, and the large amount of available financing that has resulted from untying the funds.

Financial Markets and Institutions | Notes & Videos

Financial markets finance much of the expenditures by corporations, governments, and individuals. Financial institutions are the key intermediaries in financial markets because they transfer funds from savers to the individuals, firms, or government agencies that need funds. Financial Markets and Institutions, 11th Edition, describes financial markets and the financial institutions that serve those markets. It provides a conceptual framework that can be used to understand why markets exist. Each type of financial market is described with a focus on the securities that are traded and the participation by financial institutions. Today, many financial institutions offer all types of financial services, such as banking, securities services, mutual fund services, and insurance services.

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PDF | Written for undergraduate and graduate students of finance, economics and business, the fourth edition of Financial Markets and.

Financial Markets and Institutions:

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Financial Markets o Transaction costs o Investors vs. Lecture , Notes , Market , Financial , Institutions , Instruments , Financial institutions , Financial markets and instruments lecture notes. Link to this page:.

In many parts of the world, international financial institutions IFIs play a major role in the social and economic development programs of nations with developing or transitional economies. This role includes advising on development projects, funding them and assisting in their implementation. Characterized by AAA-credit ratings and a broad membership of borrowing and donor countries, each of these institutions operates independently. All however, share the following goals and objectives:.

Financial Markets

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Financial market

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