Financial Intermediary and Banking System

Financial Intermediary and Banking System - Financial...

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Financial Intermediary and Banking Systems 7-1
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Learning Objectives Roles of Financial Intermediaries Types of Financial Intermediaries Safety (Risk) of Financial Institutions Banking System International Banking 7-2
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Financial Intermediaries Specialized financial firms that facilitate the indirect transfer of funds from savers to borrowers by offering savings instruments and borrowing instruments
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Financial Intermediation The process by which financial intermediaries transform funds provided by savers into funds used by borrowers
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The Financial Intermediation Process
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Benefits of Intermediaries Reduced costs Risk/diversification Funds divisibility/pooling Financial flexibility Related services
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Types of Intermediaries Commercial banks Credit unions Thrift institutions Mutual funds Whole life insurance companies Pension funds
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Safety (Risk) of Financial Institutions Banks, thrifts and credit unions insured by FDIC
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