Financial intermediaries bridge the gap between savers and borrowers from "summary" of Financial Markets and Institutions, Global Edition by Frederic S. Mishkin,Stanley G. Eakins
Financial intermediaries play a crucial role in the economy by connecting those who have excess funds to those who need funds. The process of channeling funds from savers to borrowers is essential for economic growth and development. Savers deposit their money with financial intermediaries such as banks, mutual funds, and insurance companies. These intermediaries then use these funds to provide loans to individuals and businesses who need capital for various purposes. By doing so, financial intermediaries help to allocate resources efficiently in the economy. Financial intermediaries help to reduce the cost of borrowing for borrowers by pooling funds from many savers and lending them out at a higher interest rate. This allows borrowers t...
Similar Posts
Building savings is a necessary step towards financial security
Building savings is not just a good idea; it is a critical step towards achieving financial security. In today's uncertain econ...
Government plays a role in macroeconomic stabilization
In the study of macroeconomics, one important concept is the role that government plays in stabilizing the economy. When the ec...
Wall Street’s blindness to the looming financial crisis
The financial crisis that hit Wall Street in 2008 seemed to come out of nowhere for many people in the financial industry. Desp...
Debt forgiveness benefits both creditors and debtors
Debt forgiveness is a concept that has far-reaching implications for both creditors and debtors. It is not simply an act of gen...
Creating multiple income streams helps safeguard against economic downturns
In the world of finance, it's common knowledge that diversification is key. When it comes to investing, you wouldn't put all yo...
Review your estate plan regularly to ensure it aligns with your goals
As you work hard to build your estate plan, it's crucial to remember that it's not a one-and-done process. Just like a car need...
Social factors play a role in shaping economic development
W. Arthur Lewis emphasizes the significance of social factors in influencing economic development. He underscores that economic...
Risk management is a key component of successful investing
When it comes to investing, understanding risk is paramount. It's not just about picking the right stocks or timing the market ...
Monetary policy may not always be effective
Monetary policy, as a tool to manage the economy, may not always yield the desired results. This is because the effectiveness o...
The intersection of science and magic
The alchemy of the 17th century was a curious blend of science and magic, a realm where the boundaries between the two were blu...
