Financecan be describe as a way or methods that related to obtain, controlled, used,and allocating the funds (Ciuhureanus et al, 2009).
Bank can be said as afinancial service that able to provide a basic services and properly works ineconomy, politics, international law that control profit opportunities,interest rate, currency, exchange rates , and a certain resources for the bank(Drig?,2006). Act as a financial intermediaries forpeople and businessesBank as a financialintermediaries has a role channeling fund from surplus unit to the deficit unit.Finance has main function as a provider for credit( Elliott et al, 2013).
Banklowering transaction cost to pool assets, they transform deposit which is shortterm liquid asset into illiquid long term assets which is loan (Diamond andRajan, 1998).Small business need support and opportunities to increase theirproductivity, UOB help them in the process so they can go through differentstages of growth. Small businesses operating efficiency is crucial and theyneed help to improve it. They need cash flow and capital for funding thebusiness so UOB as an intermediaries help them by gathering money from saversand give it as a loan. UOB giving out loan more than $1.
8 billion to 8500 smallbusiness in Singapore and Malaysia (UOB, 2016). In Singapore, UOB offeredcollateral-free working capital loan, SME working capital loan and UOBBizMoney. (UOB, 2016). BizMoney allows higher loan up to $650.000 million withflexible payment period up to five year without requiring any collateral itwill make small business easier to obtain capital and payback the creditbecause they just started their business and maybe don’t have enoughcollateral. Improve in small business will increase their business value thatwill lead to increase in country economic growth or can be said it will givegood impact for both sides.
Credit encourage economic activity for businessesand it can help development of agriculture, trade and industry. Bank function in assettransformationOtherthan role as an intermediaries between the surplus unit and deficit unit, bankhas a role in transformation. Deficit unit tend to has a higher risk ofdefaulting in their payment because they seek large size loan for long periodand in the other hand the surplus unit save small sized loan and seek for shortterm deposit they also has a lower risk in defaulting their payment. Banktransformation include size, maturity, risk and liquidity. ALCO approved UOBframework policies, controls, and limits in liquidity. These policy involvecontrol, and limits for bank to enable and monitor the group to make sure thatthe bank has enough fund resources over range of market conditions. Minimizingexcessive funding by diversify the sources and terms of funding and also highquality portfolio and marketable debt securities. Financial intermediariesinvestigate investor’s savings in various business sector, they transform riskby diversifying it so they can bear risk more efficiently.
They also do riskscreening, risk monitoring and risk evaluation, it helps individual save timeand money. Without financial intermediaries it will be difficult for individualto screen borrower prospect and investment opportunities and it will affectsavers decision from lending money and it will give an impact in economicdevelopment