Financial institutions

THE first edition of Financial Institutions has been in use in many classrooms and in the training programs of several segments of the financial community during the past five years. Even though its basic structure seemed to us still to provide a faithful portrayal of the workings of the financial system, it naturally did not reflect modifica tions nor current data. This revised edition incorporates recent finan cial developments meriting recognition as well as the essential up dating of the statistics and the re-doing of the time series charts. The many friends of our first edition will be gratified, however, to find that the basic pattern, content and philosophy have been retained with only such changes as would, we trust, effect improvement.

Financial Institutions has been prepared to provide suitable text material for an institutional approach to finance. It is designed to introduce the reader to the whole field of finance and reflects a de parture from the traditional approach under which concentrated at tention is given to a very limited number of highly specialized phases. At many colleges and universities, money and banking and corpora tion finance are the basic finance courses and emphasize, respectively, historical and theoretical aspects of commercial banking and the financing of corporations through stock and bond issues. Other finan cial institutions and phases of finance receive scant treatment, al though, admittedly, in some of the more recently published texts in economics and money and banking the institutional approach is com ing to the fore.

A broad survey course emphasizing institutions more appropriately meets the needs of the student who will take no further work in finance. On the other hand, the student who plans advance study gains an understanding of the functions and interrelationships that should be exceedingly helpful as he embarks on specialized study. Rather than displacing a course in money and banking, such a survey course prepares the student for a more sophisticated and penetrating course in money and banking. This pioneering effort to introduce financial institutions at an elementary level presented a problem of organization. Where should the circle be cut? Because the course for which this text was originally developed was offered without prerequisite, a quick survey of those basic economic concepts most pertinent to finance provided a logical starting point. It was resolved to present the nonmonetary institutions first (institutions with which the reader would be somewhat familiar), and thus furnish a good point of transition, and to defer the consider. ation of the more complex monetary institutions and governmental phases for the later portions of the course.