Financial Intermediary

The financial intermediarys specialness which acts as liaison that rise money from dropors (savers) and provides financing for individual (borrowers) much(prenominal) as technical banks, savings and loan associations, vernacular savings banks, realisation unions, insurance companies, mutual funds, pension funds, and finance companies. There atomic 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, commonplace plebeian has provided several funds which is universal Index Fund, Public intensify Bond Fund and Public Money merchandise Fund. Investors sessister spread out the money to purchase these types of funds by diversification. Thus, by pooling money together in these funds fend achieve to minimize investment risk and maximize returns. Also, inves tors give the axe purchase stocks or bonds with much lower trading be than if they tried to do it on their own. In the other hand, commercial-grade bank is an institution which collects deposit from lenders and issues loan in the land of personal and business loan as well as personal loan and mortgages loan.

Commercial bank has low movement cost mean that it provides customers with liquidity services, services that make it easier for customers to settle transactions. For example in Malaysia, Maybank as commercial bank which provides divers(a) services to depositors with checking accounts that enable them to pay their bill easily such as credit card and depositors can earn brace at 3% on saving accounts. However, the prima! ry of Maybank earns measure income by giving business loans, mortgages loans and consumer loans, they get the profits in the midst of the loans of interests and saving of interests. Bibliography Function of financial Intermediaries. In F. S.Mishkin, & S. G.Eakins, monetary Markets and Institutions seventh 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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