Specialness and regulation in the preceding section

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: d as deserving special attention in credit allocation? 3. Why is monetary policy transmitted through the banking system? Specialness and Regulation In the preceding section, FIs were shown to be special because of the various services they provide to sectors of the economy. The general areas of FI specialness include: • Information services. • Liquidity services. • Price-risk reduction services. • Transaction cost services. • Maturity intermediation services. Areas of institution-specific specialness are as follows: • Money supply transmission (banks). • Credit allocation (thrifts, farm banks). • Intergenerational transfers (pensions funds, life insurance companies). • Payment services (banks, thrifts). • Denomination intermediation (mutual funds, pension funds). Negative Externalities Action by an economic agent imposing costs on other economic agents. Redlining The procedure by which a banker refuses to make loans to residents living inside given geographic boundaries. Failure to provid...
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