Financial Intermediation


What is the financial intermediation?

         The saving / investment process in capitalist economies is organized around financial intermediation, making them a central institution of economic growth. Financial intermediations are firms that borrow from consumer/saver and lend to companies that need resources for investment.



Who is the financial intermediator?

An institution that holds funds from lenders in order to make loans to borrowers.
  According to the dominant economic view of monetary operations the following institutions are or can act as financial intermediaries: 
·         Banks
·         Mutual savings banks
·         Savings banks
·         Building societies
·         Credit unions
·         Financial advisers or brokers
·         Insurance companies
·         Collective investment schemes
·         Pension funds
·         cooperative societies
·         Stock exchanges 

Role of financial intermediaries

·         Raise funds for direct investment

ü  Their assets

ü  Stock, bonds, loans

·         Raise funds by indirect investment

ü  Issue their own liabilities

ü  Accept deposits

ü  Sell insurance policies

ü  Sell mutual funds shares

Benefits of financial intermediation

Ø  Maturity intermediation- offer contracts with varying maturity to suit both DSUs and SSUs.
Ø  Denomination intermediation- issue contract with varying sizes.
Ø  Currency intermediation- buy and sell financial claims denominated in various currencies.


Comments

  1. bm/2015/343 D.B.P.SrimaliMay 28, 2019 at 11:50 AM

    Good job. Keep it up.

    ReplyDelete
  2. BM/2015/304May 28, 2019 at 11:51 AM

    good job

    ReplyDelete
  3. D M Knowledge HubMay 29, 2019 at 6:40 AM

    Valuable

    ReplyDelete
  4. Damitha Subodani BM/2015/045May 29, 2019 at 7:02 AM

    Good job thanks...dr

    ReplyDelete
  5. Damitha Subodani BM/2015/045May 29, 2019 at 7:03 AM

    This comment has been removed by the author.

    ReplyDelete
  6. lakshiMay 29, 2019 at 8:17 AM

    Good job..

    ReplyDelete
  7. AnjaliMay 29, 2019 at 11:17 AM

    It is very interesting . Good job

    ReplyDelete
  8. Udara JayasankaJune 5, 2019 at 10:17 AM

    . thanks for share this important information.

    ReplyDelete
  9. PiyumiJune 5, 2019 at 10:38 AM

    It is very important...❤️❤️ Good job and continue also 😊

    ReplyDelete

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