NT_tema_7_English - Module7. LearningGoals char

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1 Module 7. Financial Intermediaries Learning Goals: To understand the business of intermediaries in banking, To understand the types of operation To know the items on the balance sheet and the profit and loss account. To know how intermediaries in the banking system are classified and their characteristics, their historical background and the evolution of the business. Context: Students must imagine they are carrying out a consultancy project for a financial group, analysing the possibility of creating a new financial intermediary in the Spanish market. They must be able to identify the setup requirements, the type of intermediary and the nature of the business that will be conducted. Format: 1. Definition of Financial Intermediary 2. Types of operation 3. Balance sheet and profit and loss account 4. Types of Intermediaries 5. Banks 6. Savings banks 7. Loan Cooperatives 8. Analysis of the current state of the sector Continuous assessment: Project on articles and Internet content
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2 1. Definition of Financial Intermediary These are institutions that act as intermediaries between surplus spending units and deficit spending units, and put them in touch with one another. The aim is to reduce costs and give the option to transform instruments so that they are more attractive to both parties. We must differentiate between Financial Intermediaries and ordinary intermediaries, in that the latter do not generate new instruments they simply buy and sell existing instruments Financial Intermediaries buy instruments as a form of investment, and rather than selling them on, they create new instruments that they place among savers, thus obtaining the funds they need to make investments. Financial Intermediaries take deposits from savers, which are thus also known as depository entities. Financial Intermediaries perform a fundamental role in the economy, issue financial instruments that allow savers to materialise their savings and enable lenders to mobilise funds for financing (reducing costs and logistics). They are the alternative to the financial markets. This transformation of instruments to create new ones with different forms (current account, etc.) is the basic activity of Financial Intermediaries Services provided by Financial Intermediaries to economic agents (functions) are as follows: They transform the risk of different instruments through portfolio diversification (indivisible economy, transaction management). They transform the maturity of financial instruments. They produce and manage payment and settlement mechanisms. They are a vehicle for Monetary Policy.
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3 2. Banking Operations As part of their duties as Financial Intermediaries, depository entities can carry out a range of operations that we could group into three categories: a. Liability side banking operations, or capturing resources. b.
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This note was uploaded on 02/03/2011 for the course ECON 101 taught by Professor Flora during the Spring '11 term at Universidad Carlos III de Madrid.

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NT_tema_7_English - Module7. LearningGoals char

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