Untitled2_27 - Chapter 2: Introduction to financial systems...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Summing up, as shown in Figure 2.4, the total intermediated funds intermediated by US financial intermediaries are US$ 25.17 trillion in 2006. Commercial banks account for the highest proportion, followed by Finance companies Finance companies make loans to individuals and corporations by providing consumer lending, business lending and mortgage financing. Some of their loans are similar to those provided by commercial banks. However, finance companies differ from commercial banks because they do not accept deposits. They raise funds by selling commercial papers (a short- term debt instrument) and by issuing stocks and bonds. Moreover, finance companies often lend to customers perceived as too risky by commercial banks. There are three major types of finance companies: • Sales finance institutions that make loans to customers of a particular retailer or manufacturer (e.g. Ford Motor Credit). • Personal credit institutions that make loans to consumers perceived as
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/23/2009 for the course BUSI 101 taught by Professor Wormer during the Spring '08 term at Acton School of Business.

Ask a homework question - tutors are online