Individually a saver may be unable to purchase such

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Unformatted text preview: CD is $100,000 and commercial paper (short-term corporate debt) is often sold in minimum packages of $250,000 or more. Individually, a saver may be unable to purchase such instruments. However, by buying shares in a money market mutual fund along with other small investors, household savers overcome the constraints to buying assets imposed by large minimum denomination sizes. Such indirect access to these markets may allow small savers to generate higher returns on their portfolios as well. 8 E. Laderman and W. Passmore, “Is Mortgage Lending by Savings Associations Special?” Finance and Economics Discussion Series, Federal Reserve Board, 1998–25, find, however, that the elimination of specialized savings banks in the United States would not have a major effect on mortgage borrowers. sau86198_ch01.qxd 4/21/02 8:52 PM Page 11 Chapter 1 Why Are Financial Intermediaries Special? 11 Concept Questions 1. Why does the need for denomination intermediation arise? 2. What are the two major sectors that society has identifie...
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