Financial Intermediaries Paper

Financial Intermediaries Paper Financial Intermediaries Paper In pecuniary markets where consumers, businesses, and governments transact loans, savings, and investments financial institutions serve as intermediaries between the parties. The predominant role of a financial intermediary is to convert the savings deposits made by consumers into loans. Banks encourage consumers to put their savings into accounts that pay interest with the role of borrowing that cash and converting it into loans to other consumers and businesses. Financial institutions loan these monies extinct with the objective of gaining a return from the interest charged on that loan. The interest rates that these financial institutions compensate their customers for borrowing their money to reinvest are funded by the interest that the bank collects from those loans. Consumers tend to desire on the financial information housed by intermediaries as the derriere for saving money. With individuals saving more money than they borrow, they become the lolly suppliers for financial institutions. (Gitman, 2006) Financial institutions must be able to provide their customers with the assurance of knowledgeable, educated, and ethical decisions in the investing of their funds in order to attract them into depositing their money.

By providing consumers and investors with the knowledge and trends in the financial markets, financial institutions can also provide consumers with investment options. The federal official modesty serves as the supervisory body of the US economy and the financial institutions that manage the savings and investments of the public. In the US, the Federal Reserve Board focuses on the holding companys financial strength and stability, its consolidated risk management and its overall seat of government adequacy, with the specific goal of assuring the soundness of the affiliated monument institutions. (Links between institutional, 2006) In managing the money supply, discount rate, and bank reserves,... If you fate to get a full essay, order it on our website: Orderessay

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