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

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: y burden on their operations. 11 Robert C. Merton, “A Functional Perspective of Financial Intermediation,” Financial Management 24 (Summer 1995), pp. 23–41. 12 Thus, equity holders are junior claimants and debt holders are senior claimants to an FI’s assets. sau86198_ch01.qxd 4/21/02 8:52 PM Page 13 Chapter 1 Why Are Financial Intermediaries Special? 13 savings associations,13 the Security Investors Protection Corporation (SIPC) for securities firms, and the state guaranty funds established (with regulator encouragement) to meet insolvency losses to small claimholders in the life and property-casualty insurance industries. By protecting FI claimholders, when an FI collapses and owners’ equity or net worth is wiped out, these funds create a demand for regulation of the insured institutions to protect the funds’ resources (see Chapter 19 for more discussion). For example, the FDIC monitors and regulates participants in both BIF and SAIF. The fourth layer of regulation is monitoring and...
View Full Document

This document was uploaded on 03/09/2014 for the course ACC 301 at HELP University.

Ask a homework question - tutors are online