Scribd Logo
Upload

Welcome to Scribd!

  • 10 views

    Finance Intermediataries.pptx 20241118 170332 0000

    Uploaded by

    ronaktheeditor

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Finance Intermediataries.pptx 20241118 170332 0000

    Uploaded by

    ronaktheeditor
    10 views7 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    10 views7 pages

    Finance Intermediataries.pptx 20241118 170332 0000

    Uploaded by

    ronaktheeditor

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 7

    Finance Intermediataries

    A financial intermediary is an entity that


    acts as the middleman between two
    parties in a financial transaction, such as
    a commercial bank, investment bank,
    mutual fund, or pension fund. Financial
    intermediaries offer a number of benefits
    to the average consumer, including
    safety, liquidity, and economies of
    scale involved in banking and asset
    management.
    How a Financial Intermediary Works

    A financial intermediary does not accept


    deposits from the general public. The
    intermediary may provide factoring, leasing,
    insurance plans, or other financial services.
    In fact the intermediaries take part in
    securities exchanges and utilize long-term
    plans for managing and growing the funds of
    the public.
    Financial intermediaries move funds from
    parties with excess capital to parties needing
    funds.
    The process creates efficient markets and
    lowers the cost of conducting business.
    For example, a financial advisor connects
    with clients through purchasing insurance,
    stocks, bonds, real estate, and other assets.
    Banks connect borrowers and lenders by
    providing capital from other financial
    institutions and from the Government
    Reserve.
    Insurance companies collect premiums for
    policies and provide policy benefits.
    A pension fund collects funds on behalf of
    members and distributes payments to
    pensioners.
    Benefits of Financial Intermediataries

    For example Mutual funds provide active


    management of capital pooled by
    shareholders. The fund manager connects
    with shareholders through purchasing stock
    in companies he anticipates may outperform
    the market. By doing so, the manager
    provides shareholders with assets,
    companies with capital, and the market with
    liquidity.
    Through a financial intermediary investors
    can pool their funds, enabling them to make
    large investments, which in turn benefits the
    entity in which they are investing.
    At the same time, financial intermediaries
    pool risk by spreading funds across a diverse
    range of investments and loans.
    they reduce the costs of the many financial
    transactions an individual investor would
    otherwise have to make if the financial
    intermediary did not exist.
    Financial intermediaries also provide the benefit
    of reducing costs on several fronts. For example,
    they have access to economies of scale to
    expertly evaluate the credit profile of potential
    borrowers and keep records and profiles.

    You might also like