Nonbank financial institutions

What are examples of nonbank financial institutions?

Building societies, credit unions, and finance companies.

what is an ADI?

An authorised deposit taking institution

what type of entity are building societies considered in AUS?

authorised deposit taking institutions (ADIs)

What do building societies primarily specialise in?

Making mortgage loans funded from deposits.

What new business activities have building societies recently pursued?

Commercial loans, corporate bonds, and other investment securities.

T or F: building societies are regulated in the same way as banks.

true

How do New Zealand building societies raise funds?

By issuing shares to members, usually paid over time by subscription.

What are the traditional uses of funds raised by New Zealand building societies?

Providing mortgage advances for house purchases

Do building societies in New Zealand provide banking services?

Yes, but they are not registered banks.

What type of financial entity are New Zealand building societies considered?

Non-bank deposit takers (NBDTs).

What is required for a building society to operate as an NBDT in New Zealand?

A license from the Reserve Bank of New Zealand (RBNZ).

What type of loans do Australian credit unions specialize in?

Short-term consumer loans.

what entity are credit unions considered as

ADIs

Who owns and operates Australian credit unions?

Their members, as credit cooperatives.

How does one become a member of an Australian credit union?

By purchasing a membership share.

What is a common bond in Australian credit unions?

Association such as occupation, religion, trade union, or residence.

T or F: Australian credit unions are not regulated like banks

false

What is a New Zealand credit union?

A member-owned co-operative financial organisation which provides savings and loan facilities for its members.

What is required among members of a NZ credit union?

A common bond, such as location or employer.

How do NZ credit union members benefit from their savings?

They receive a dividend.

Are NZ credit unions considered registered banks?

No

What is the regulatory classification of NZ credit unions?

Non-bank deposit takers (NBDTs).

Who supervises NZ credit unions?

The Reserve Bank of New Zealand (RBNZ).

What do Australian finance companies specialize in?

Consumer and business finance and leasing, they also deal in many of the same products as banks, building societies and credit unions.

T or False: Finance companies accept deposits from public

false

How do Australian finance companies raise funds?

Through the sale of commercial paper, notes, bonds, or stock.

Are finance companies in Australia more or less diverse than building societies and credit unions?

more diverse

Can New Zealand finance companies take deposits from the public?

Yes, if they are licensed by the RBNZ as Non-Bank Deposit Takers (NBDTs).

What are the two types of NZ finance companies?

Deposit-taking and non-deposit-taking finance companies.

what are three types of finance companies?

sales, niche and consumer finance companies

What is a sales finance company?

A company that finances goods sold by their parent company.

What are captive sales finance companies?

Subsidiaries of retailers or manufacturers that help finance sales of their products

What do niche finance companies focus on?

Specific products such as payday loans, debt consolidation, or leasing.

what are the two types of niche finance companies

payday lenders and debt consolidation companies

What is a payday lender?

A company offering very short-term loans at high interest rates.

What do debt consolidation companies do?

Combine several personal debts into one manageable loan.

what do Consumer finance companies specialise in?

making cash/personal loans to consumers.

What is a personal loan from a consumer finance company typically used for?

Financing specific assets, like real estate or motor vehicles.

What is wholesale financing?

A finance company helps a dealer buy goods for resale.

What is retail financing?

Financing goods used for business through installment sales contracts.

What is lease financing?

Financing that provides tax benefits, ownership flexibility, or convenience.

What is factoring in finance companies?

Taking ownership of commercial accounts receivable.

What does securitisation of receivables involve?

Packaging assets like leases, credit card loans, or car loans into securities.

What are the two types of non-bank lending institutions (NBLIs) in NZ?

Non-bank deposit-taking institutions (e.g. credit unions, building societies, deposit-taking finance companies). Non-deposit-taking finance companies

Which type of NBLI requires a license from the RBNZ?

Non-bank deposit-taking institutions.

Which institutions are covered under the deposit compensation scheme (DCS)?

Banks, building societies, credit unions, and licensed finance companies in New Zealand.

What happens under the DCS if a deposit taker fails?

Customers are covered for up to NZ$100,000 per deposit taker.