Tutorspoint.com is an excellent site, which caters to all queries of economics students, regarding econometric assignments related to topics like Financial Intermediaries and homework help with quality solutions.
Since all the Economics Assignment writing help is offered at reasonable rates, Tutorspoint economics expert service is highly recommended by students worldwide from many universities in the USA. America, Australia, Canada, Germany, Ireland, and Denmark.
What do you mean by Financial Intermediaries?
Money has to be circulated in the economy because if it is not then it will lead to the hoarding of money which will lead to economic stagnation. To avoid this kind of situation it is essential that the money flows from one part to the other. To make this process easy there are financial intermediaries.
Their duty is to circulate money from a surplus-generating firm to a deficit-ruined organization. Thus the money is circulated and profits can be earned.
What are the types of Financial Intermediaries?
There are many types of financial intermediaries, They are as follows:
Banks at the apex
Money Lenders
Mutual Funds
Insurance Companies
Chit Funds
Pension Funds
Financial Brokers
They help in providing direct contact between the lenders and the buyers. They play an important role in making productive use of finances.
What are the Advantages of Financial Intermediaries
There are several advantages to financial intermediaries. They are:
a) They help in providing money to the needy companies
b) They protect companies from market failure and thus have a cost advantage
c) Financial intermediaries reduce the cost at which the money is given
d) They also provide economies of scale and thus production process cannot be hampered
e) Money that is provided is flexible in nature
f) Money Cycle of the Intermediaries
The way in which financial intermediaries work is very simple. If we take the example of a Bank then the bank has various types of accounts in which the customers open their accounts and lend money to the bank. In a similar pattern, the bank lends money to companies that require money for expansion, etc. This money is provided in the form of loans and overdrafts.
The bank gets interested in these overdrafts which are also their profits. In this way, the bank is taking money from the individuals who have surplus money and then gives it to the institutions that require funds.
How does Government Support
Even the government actively participates in developing Financial Intermediaries. The government has set up many financial and Non-Banking Financial Institutions (NBFI) for providing financial aid to developing companies.
It includes leasing companies, Investment companies, and Loan Companies.
Thus the work of Financial Institutions is very important to set up any company and it is useful even at the household level. At the household level, the loans that an individual gets are also provided by some of the other financial institutions.
Financial Intermediaries Homework Help