Types of financial institutions
Different financial institutions play different roles in the U.S. economy. A depository is a financial institution that accepts deposits from the public and includes banks, credit unions, loan associations, and banks. Out of the three, banks are the most prominent because they loan from the finances deposited. Moreover, banks invest in government securities and earn interests on it to comply with Federal Reserve requirements (Liu et al., 2014). On the other hand, contractual financial institutions are insurance companies that obtain their funds from policy buyers and use the funds for long term investments. The inflow of premiums gives contractual institutions funds. They comprise of bot non-life ad life insurance. Thirdly, investment banks which in 1933were separated from financial banks are responsible for raising funds for public companies, government companies, and private companies (Liu et al., 2014). The financial institution is involved in debt syndications, joint ventures, and private equity. Therefore, they are the intermediary between investors and financial institutions (Liu et al., 2014). The three financial institutions actively invest in derivatives, money markets, interbank markets, and forex among other bodies. The institutions are used as a model of deploying or raising capital regarding risk-reward ratio and time horizon requirements.
Amazon is a company that enjoys and is likely to have encountered or will encounter different ethical challenges. First, during its inception, Amazon is likely to have faced the challenge of implementing effective financial management policies and employees might have not booked or shown all profits in the accounting books. Also, the internal measures are likely not to have put in place accountability measures.
It would have been difficult for the managers to sustain best and ethical practices in the inception stages of the business. Moreover, the financial managers would not have been given opportunities by the stakeholders to work independently (Liu et al., 2014). Besides, the pressure to achieve a specified amount of profit may have led to lagging or leading of expenses to show the set profits.
Getting involved in unethical issues to meet shareholder demands is not acceptable and may have negative long-term implications for the organization. Therefore, as a financial manager, it is important to make clear all the policies and activities of the company clear (Liu et al., 2014). This will ensure that the company has is strong enough and has independence.
ReferencesLiu, C., Yip, Y. C., J, Y. L., & H, C. S. (May 06, 2014). Differences in earnings management between firms using US GAAP and IAS/IFRS. Review of Accounting and Finance, 13, 2, 134-155.
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