Economic Institutions Jss 3 Social Studies Second Term Week 7

Subject  Social Studies

Class : Jss 3 Year 9 

Term :  Second Term

WEEK 7

Date__________

TOPIC: ECONOMIC INSTITUTION

CONTENT:

1. Meaning and examples of economic institution.

2. The role of economic institution in Nigeria’s economy.

SUB-TOPIC

1: MEANING AND EXAMPLES OF ECONOMIC INSTITUTIONS

2: DEFINITION OF ECONOMIC INSTITUTIONS

Economic institutions are agencies responsible for the organization of a society’s resources and services.

Examples of economic institutions:

1. BANKS
2. THE NIGERIAN STOCK EXCHANGE ( NSE)
3. SECURITIES AND EXCHANGE COMMISSION ( SEC)
4. INSURANCE COMPANIES E.G LIFE INSURANCE,HEALTH INSURANCE.
5. NIGERIAN DEPOSIT INSURANCE COORPORATION ( NDIC)
6. MARKETING INSTITUTIONS ETC

BANKS:

Banks are economic institutions that receive, keep and lend money at interest. They are the pivot around which a nations economy revolves.

Types of banks:

The types of banks operated in Nigeria to meet both private and corporate organizations’ needs include:

1. Central bank of Nigeria- a non-profit organization for government transactions
2. Commercial banks
3. Federal savings bank
4. Agricultural credit banks
5. Merchant bank- for merchants and large scale traders
6. Industrial development banks
7. Mortgage banks for small and medium scale industries.

NIGERIAN STOCK EXCHANGE

It is an organized and essential part of the capital market where investors buy and sell stocks, shares, debentures etc.

The NSE was established through the act of parliament in 1960 and was then called Lagos Stock Exchange until 1977. It is situated in Lagos with its branches in Port Harcourt and Abuja, Ibadan, Kaduna, Kano and Onitsha.

INSURANCE COMPANIES

Insurance is a system of providing compensation for the effect of losses. It operates on the principle of risk pooling.

A provision made by an individual or establishment to cushion the effect of future losses. Life, automobile, health, and property can be insured and the companies involved in insurance include: Goldlink insurance company, Africa alliance insurance companies, Lion of Africa insurance, reinsurance corporation of Nigeria, industrial and general insurance (IGI), NICON insurance corporation etc.

TYPES OF INSURANCE

1. Agricultural insurance
2. Fire insurance
3. Marine insurance
4. Whole life insurance
5. Fidelity guarantee
6. Cash in transit insurance
7. Motor vehicle insurance
8. Health insurance
9. Liability insurance
10. Group insurance
11. Home insurance
12. Credit insurance etc

SECURITIES AND EXCHANGE COMMISSION (SEC)

This is an economic institution which oversees, regulates, monitors and controls the activities on the capital market. It was established in 1979 to replace the Capital Issue Commission formed in 1973 by the federal government. Its scope covers all public limited liability companies or private limited liability companies.

NIGERIAN DEPOSIT INSURANCE CORPORATION (NDIC)

This is an economic institution established to protect bank deposit in order to enhance healthy banking system in Nigeria.

It is empowered to regulate, supervise and advice the insured banks. It also operates on a mechanism that all commercial banks, merchant banks and other financial institution receiving deposits must insure their deposits with the NDIC.it conducts periodic examination of bank records and banks’ activities and protects the interests of depositors.

We also have marketing institution, farming institution , manufacturing institutions etc

Evaluation:

1. Mention 5 types of insurance
2. Define the term insurance
3. Mention any 6 examples of economic institution
4. Enumerate 5 types of banks
5. What is the full meaning of these acronyms
6. NDIC
7. NSE
8. SEC

Discussion about Economic Institutions

1. What are economic institutions?
   • Economic institutions are agencies responsible for organizing a society’s resources and services to facilitate economic activities and transactions.
2. Can you provide examples of economic institutions?
   • Examples of economic institutions include banks, the Nigerian Stock Exchange (NSE), Securities and Exchange Commission (SEC), insurance companies, and marketing institutions, among others.
3. What role do banks play in the economy?
   • Banks receive, keep, and lend money at interest, serving as crucial intermediaries in the financial system and facilitating economic transactions and investments.
4. What types of banks operate in Nigeria?
   • In Nigeria, various types of banks cater to the needs of both private individuals and corporate organizations, including central banks, commercial banks, federal savings banks, agricultural credit banks, merchant banks, industrial development banks, and mortgage banks.
5. What is the Nigerian Stock Exchange (NSE)?
   • The NSE is a vital component of the capital market where investors trade stocks, shares, debentures, and other securities. Established in 1960, it facilitates the buying and selling of financial instruments to mobilize capital for economic development.
6. How does insurance contribute to economic stability?
   • Insurance provides compensation for losses, operating on the principle of risk pooling. It enables individuals and businesses to mitigate the financial impact of unforeseen events, thus promoting economic stability and resilience.
7. What are some types of insurance available?
   • Various types of insurance cater to different needs, including agricultural insurance, fire insurance, marine insurance, life insurance, health insurance, motor vehicle insurance, and liability insurance, among others.
8. What is the role of the Securities and Exchange Commission (SEC)?
   • The SEC oversees, regulates, and monitors activities in the capital market, ensuring transparency, investor protection, and market integrity. Established in 1979, it plays a crucial role in maintaining the efficiency and fairness of the financial system.
9. What is the Nigerian Deposit Insurance Corporation (NDIC)?
   • The NDIC is tasked with protecting bank deposits to enhance the stability of the banking system in Nigeria. It regulates, supervises, and advises insured banks while ensuring depositors’ interests are safeguarded through mechanisms such as deposit insurance.
10. Are there other types of economic institutions apart from those mentioned?
    • Yes, besides banks, stock exchanges, insurance companies, and regulatory bodies like the SEC and NDIC, there are also other economic institutions such as marketing institutions, farming institutions, manufacturing institutions, and more, each playing a specific role in the economy’s functioning and development.

Evaluation:

1. Banks are economic institutions that __________ money at interest.
   • a) lend
   • b) borrow
   • c) invest
   • d) save
2. The Central Bank of Nigeria primarily deals with __________ transactions.
   • a) government
   • b) corporate
   • c) individual
   • d) international
3. The Nigerian Stock Exchange facilitates the buying and selling of __________.
   • a) commodities
   • b) real estate
   • c) stocks
   • d) bonds
4. Insurance operates on the principle of __________.
   • a) risk avoidance
   • b) risk pooling
   • c) risk escalation
   • d) risk elimination
5. Which type of insurance covers losses related to agricultural activities?
   • a) Health insurance
   • b) Fire insurance
   • c) Agricultural insurance
   • d) Motor vehicle insurance
6. The Securities and Exchange Commission (SEC) was established in __________.
   • a) 1960
   • b) 1973
   • c) 1977
   • d) 1979
7. The Nigerian Deposit Insurance Corporation (NDIC) protects __________.
   • a) bank deposits
   • b) stock investments
   • c) insurance premiums
   • d) agricultural loans
8. Mortgage banks primarily serve __________ industries.
   • a) large-scale
   • b) agricultural
   • c) manufacturing
   • d) small and medium-scale
9. The Nigerian Stock Exchange was initially known as __________.
   • a) Abuja Stock Exchange
   • b) Lagos Stock Exchange
   • c) Kano Stock Exchange
   • d) Onitsha Stock Exchange
10. Insurance companies provide compensation for the effect of __________.
    • a) gains
    • b) profits
    • c) losses
    • d) investments
11. The scope of the Securities and Exchange Commission covers __________.
    • a) only public limited liability companies
    • b) only private limited liability companies
    • c) both public and private limited liability companies
    • d) non-profit organizations
12. Which institution oversees, regulates, and monitors the activities in the capital market?
    • a) Central Bank of Nigeria
    • b) Nigerian Deposit Insurance Corporation
    • c) Securities and Exchange Commission
    • d) Nigerian Stock Exchange
13. The Nigerian Deposit Insurance Corporation conducts periodic examination of __________.
    • a) insurance claims
    • b) stock investments
    • c) bank records
    • d) mortgage loans
14. Industrial development banks primarily support the growth of __________.
    • a) agriculture
    • b) commerce
    • c) manufacturing
    • d) real estate
15. Which economic institution protects bank deposits to enhance the stability of the banking system?
    • a) Nigerian Stock Exchange
    • b) Central Bank of Nigeria
    • c) Securities and Exchange Commission
    • d) Nigerian Deposit Insurance Corporation

SUB TOPIC 2:ROLES OF ECONOMIC INSTITUTIONS IN NIGERIA’S

ECONOMY

Role Of Banks

1. Banks issue cheques – this helps to enhance trade and travel
2. Lending money to the government, firms and private individuals.
3. Safe keeping of valuables
4. Banks play the role of payment agents.
5. The central bank controls the flow of cash in circulation
6. Banks, especially commercial banks act as executor of will
7. Banks buy and sell shares and stock to their customers

Roles of insurance companies

Insurance is very vital in the economy of Nigeria because of the following roles it plays:

1. It provides an avenue for businesses to keep going, even after liabilities are incurred.
2. It improves productivity of workers through group insurance policy, where workers are fully assured of a secured future.
3. It encourages international trade
4. It makes money/ fund available for investment, which invariable helps in developing the country’s economy.
5. Insurance encourages savings
6. Life assurance certificate can be used as collaterals for bank loans.

Roles of Nigerian Stock Exchange

1. The NSEhelps companies, government and investors to mobilize funds for projects execution.
2. It serves as a market where people can invest their money in of companies’ shares i.e. financial market investment.
3. It acts to promote the transfer of shares.
4. It provides the platform for government to mobilize funds through bond selling or gilt – edge securities in the stock market.
5. It assists investors to buy or sell old securities.
6. It helps individuals to transfer securities easily
7. Provides job opportunities for stock brokers, computer operators etc
8. It monitors the activities of quoted companies
9. Assist investors in the identification of thriving and viable companies
10. Aids selling and buying of stock, shares and debentures

ROLES OF SECURITIES AND EXCHANGE COMMISSION (SEC)

1. Helps to determine the allotment of securities.
2. It functions to regulate time, prices and quantity of securities issued.
3. Promotion of capital market development.
4. It monitors the transactions on the stock exchange in order to ensure fair play.

e) Registration of securities and participants.

GENERAL ROLES OF ECONOMIC INSTITUTION

1. They assist in determining how political decisions are made.
2. They provide the platform for the exchange of goods and services.
3. They ensure the continuous circulating and security of money.
4. They dictate the level of a country’s economic development
5. Provision of employment opportunities
6. They play the role of professional advisers.
7. Enhancement of industrial development.
8. They encourage industrial growth through provision of working capital
9. Economic institutions earn the country foreign exchange
10. They promote cultural exchange.
11. They encourage savings needed to boost the level of investment.
12. They provide the needed securities for commercial activities through insurance services.

Discussion about the Roles of Economic Institutions in Nigeria’s Economy

1. What are the key roles of banks in Nigeria’s economy?
   • Banks in Nigeria play essential roles such as issuing cheques, lending money to the government and individuals, safekeeping valuables, acting as payment agents, controlling cash flow, executing wills, and facilitating buying and selling of shares.
2. How do insurance companies contribute to Nigeria’s economy?
   • Insurance companies in Nigeria support the economy by providing continuity for businesses after liabilities, enhancing worker productivity through group insurance, promoting international trade, making funds available for investment, encouraging savings, and offering life assurance certificates as collateral for bank loans.
3. What functions does the Nigerian Stock Exchange (NSE) serve in Nigeria’s economy?
   • The NSE helps mobilize funds for projects, acts as a market for financial investments, promotes share transfers, facilitates government fundraising through bond sales, enables easy securities transfer, creates job opportunities, monitors listed companies’ activities, and assists investors in identifying viable companies.
4. What are the roles of the Securities and Exchange Commission (SEC) in Nigeria?
   • The SEC determines securities allotment, regulates time, prices, and quantities of securities issued, promotes capital market development, monitors stock exchange transactions for fairness, and registers securities and participants.
5. What are the general roles of economic institutions in Nigeria?
   • Economic institutions in Nigeria influence political decisions, facilitate the exchange of goods and services, ensure the circulation and security of money, dictate economic development levels, provide employment, offer professional advice, enhance industrial development, earn foreign exchange, promote cultural exchange, encourage savings and investment, and provide insurance for commercial activities.
6. How do banks contribute to trade and travel enhancement?
   • Banks issue cheques, which facilitate trade and travel by providing a secure and convenient method of payment, reducing the need for carrying large amounts of cash.
7. What role does the Central Bank of Nigeria play in controlling cash flow?
   • The Central Bank of Nigeria controls the flow of cash in circulation by regulating the supply of money in the economy through measures such as monetary policy adjustments and open market operations.
8. How do insurance companies encourage savings in Nigeria?
   • Insurance companies encourage savings by providing various insurance policies that offer financial security and incentives for individuals and businesses to set aside funds for future contingencies.
9. What is the significance of the SEC’s role in regulating securities issuance?
   • The SEC’s regulation of securities issuance ensures transparency, fairness, and investor protection in capital markets, thereby fostering investor confidence and promoting market integrity.
10. How do economic institutions contribute to industrial growth in Nigeria?
    • Economic institutions support industrial growth by providing working capital, facilitating investment, offering insurance services for commercial activities, and promoting policies and initiatives that stimulate industrial development.

Weekend Assignment:

Objective Test:

1. All but one of these are examples of economic institutions(a) Banks (b) insurance companies (c) World Health Organization (d) securities and exchange commission
2. An organized and essential part of the capital market where share are sold and bought is known as (a) corporal market (b) the Nigerian Stock Exchange market (c) central bank (d) monopolistic market.
3. The role of insurance companies include all but one of these (a) Wasteful and uncourteous spending of national wealth (b) encouragement of international trade (c) encouragement of saving (d) improved workers productivity.
4. The full meaning of NDIC is………. (a) National Directorate of Immediate Cash (b) Nigeria Drug Improvement Commission (c) Nigeria’s Deposit In Canada (d) Nigerian Deposit Insurance Corporation
5. The economic institution that helps to determine the allotment of securities and promote capital market development is the _________(a) NDIC (b) SEC (c) NNPC (d) Insurance companies
6. Banks issue cheques to help __________ trade and travel.
   • a) improve
   • b) enhance
   • c) boost
   • d) grow
7. Lending money to the government, firms, and individuals is a role of __________.
   • a) schools
   • b) hospitals
   • c) banks
   • d) parks
8. Insurance encourages __________ by providing financial security.
   • a) spending
   • b) saving
   • c) borrowing
   • d) investing
9. The Nigerian Stock Exchange helps companies, government, and investors to __________ funds for projects execution.
   • a) lose
   • b) find
   • c) raise
   • d) lower
10. The Securities and Exchange Commission (SEC) regulates __________ issued in the capital market.
    • a) stocks
    • b) shoes
    • c) hats
    • d) toys
11. Economic institutions provide the platform for the exchange of __________.
    • a) goods and services
    • b) books and pencils
    • c) games and toys
    • d) clothes and shoes
12. They ensure the continuous __________ and security of money.
    • a) stoppage
    • b) circulation
    • c) pause
    • d) blockage
13. Economic institutions play a role in determining the level of a country’s __________.
    • a) happiness
    • b) sadness
    • c) economic development
    • d) boredom
14. Provision of employment opportunities is a role of __________.
    • a) banks
    • b) schools
    • c) economic institutions
    • d) parks
15. They encourage savings needed to __________ investment.
    • a) reduce
    • b) increase
    • c) stop
    • d) prevent
16. Insurance makes money available for __________.
    • a) spending
    • b) borrowing
    • c) investment
    • d) lending
17. The Nigerian Stock Exchange serves as a market for investing in __________.
    • a) land
    • b) companies’ shares
    • c) food
    • d) clothes
18. The Securities and Exchange Commission helps to determine the __________ of securities.
    • a) price
    • b) color
    • c) size
    • d) shape
19. Economic institutions play a role in enhancing __________.
    • a) boredom
    • b) industrial development
    • c) laziness
    • d) loneliness
20. They provide the needed __________ for commercial activities through insurance services.
    • a) security
    • b) danger
    • c) risk
    • d) safety

Essay Test:

1. Explain the role of marketing institution in Nigeria’ economy.

2. In five(5) sentences, mention the import of our lesson on ‘economic institution in Nigeria’(why do think we need to know about economic institution in Nigeria?).

3. Look up the meaning of these terms from your dictionary and write out the meanings:Debenture, Investor, Shareholder, Jobber and Broker

READING ASSIGNMENT: Readpages 96&97of Basis Social Studies for Junior Senior SecondarySchools. By Anikpo et al.