Financial Intermediary

The financial intermediarys specialness which acts as trench that rise money from inductors (savers) and provides financing for individual (borrowers) such(prenominal) as technical banks, savings and loan associations, plebeian savings banks, realization unions, insurance companies, mutual funds, pension funds, and finance companies. There nuclear number 18 unhomogeneous services such as mutual funds, that stomach a group of investors pool their money in concert with mold investment objectives and the fund manager uses the money to invest in stocks, bonds and money market instrument. For example in Malaysia, macrocosm plebeian has provided several funds which is exoteric Index Fund, Public intensify Bond Fund and Public Money trade Fund. Investors sessister spread out the money to purchase these types of funds by diversification. Thus, by pooling money together in these funds stand achieve to minimize investment risk and maximize returns. Also, investors goat purchase stocks or bonds with much lower trading be than if they tried to do it on their own. In the other hand, mercenary bank is an institution which collects deposit from lenders and issues loan in the let of personal and business loan as well as personal loan and mortgages loan. Commercial bank has low transaction cost mean that it provides customers with liquidity services, services that make it easier for customers to overhaul transactions. For example in Malaysia, Maybank as commercial bank which provides conglomerate services to depositors with checking accounts that enable them to pay their bill easily such as credit card and depositors can earn touch on at 3% on saving accounts. However, the primary of Maybank earns valuate income by giving business loans, mortgages loans and consumer loans, they get the profits betwixt the loans of interests and saving of interests. Bibliography Function of financial Intermediaries. In F. S.Mishkin, & S. G.Eakins , financial Markets and Institutions sevent! h Edition (pp. 62-70). United States of America....If you want to get a full essay, order it on our website: OrderEssay.net

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