Functions Performed By Financial Intermediaries
Financial intermediaries provide 3 major functions:
- Maturity transformation
- Converting short-term liabilities to long term assets (banks deal with large number of lenders and borrowers, and reconcile their conflicting needs)
- Risk transformation
- Converting risky investments into relatively risk-free ones. (lending to multiple borrowers to spread the risk)
- Convenience denomination
- Matching small deposits with large loans and large deposits with small loans
Read more about this topic: Financial Intermediaries
Famous quotes containing the words functions, performed and/or financial:
“When Western people train the mind, the focus is generally on the left hemisphere of the cortex, which is the portion of the brain that is concerned with words and numbers. We enhance the logical, bounded, linear functions of the mind. In the East, exercises of this sort are for the purpose of getting in tune with the unconscious—to get rid of boundaries, not to create them.”
—Edward T. Hall (b. 1914)
“Fantasies are more than substitutes for unpleasant reality; they are also dress rehearsals, plans. All acts performed in the world begin in the imagination.”
—Barbara Grizzuti Harrison (b.1941)
“In full view of his television audience, he preached a new religion—or a new form of Christianity—based on faith in financial miracles and in a Heaven here on earth with a water slide and luxury hotels. It was a religion of celebrity and showmanship and fun, which made a mockery of all puritanical standards and all canons of good taste. Its standard was excess, and its doctrines were tolerance and freedom from accountability.”
—New Yorker (April 23, 1990)