0
By the use of financial intermediaries it will be possible to provide a number of key benefits.
- Maturity Transformation - Deposits are mostly short term but loans are mostly long term. This mismatch can be overcome using financial intermediation.
- Risk Transformation - Depositors are reluctant to give their money to borrowers due to risk of fraud. intermediaries have the experience and the credit management skills to over come this problem.
- Aggregation - Deposits are mostly in small amounts but loans are in large amounts this mismatch can be overcome by intermediation.
- Geographical location - Lenders may not be able to locate the borrowers even within the same geographical area this mismatch can be overcome by using intermediation.
Wiki User
∙ 13y ago
Add your answer:
Earn +20 pts
How does the possibilty of financial intermediation increase the efficiency of the financial system?
Financial intermediation is a way of indirect finance. Some lenders prefer lend indirectly via financial intermediaries by using financial instruments. Indirect finance is as important as direct finance for the financial system to survive. Thus, financial intermediation is an asset for an efficient financial system.
What problems would arise without financial intermediation?
The amount to loan Duration or maturity of loan Attitudes toward risk
What benefits do financial market offer?
What benefits do financial market offer
What are benefits to a financial balance sheet?
What are benefits to a financial balance sheet?
What are the Benefits of financial ratio analysis?
One of the main benefits of financial ratio analysis is that it simplifies financial statements. Another advantage is that vital information is easily highlighted.
How does the possibilty of financial intermediation increase the efficiency of the financial system?
Financial intermediation is a way of indirect finance. Some lenders prefer lend indirectly via financial intermediaries by using financial instruments. Indirect finance is as important as direct finance for the financial system to survive. Thus, financial intermediation is an asset for an efficient financial system.
What has the author Stuart I Greenbaum written?
Stuart I. Greenbaum has written: 'Contemporary financial intermediation' -- subject(s): Bank management, Banks and banking, Financial services industry, Intermediation (Finance)
Distinguish between financial intermediation and financial facilitation?
Financial intermediation is channeling funds from lenders to borrowers, sort of like a middle-man in the process. Financial facilitation can be either the act of preserving a market's liquidity or the act of supplying a market for a security.
What has the author Michel de Lange written?
Michel de Lange has written: 'Essays on the theory of financial intermediation' -- subject(s): Credit, Deposit insurance, Intermediation (Finance)
What has the author J H Miller written?
J H. Miller has written: 'Macro-modelling with financial intermediation'
What problems would arise without financial intermediation?
The amount to loan Duration or maturity of loan Attitudes toward risk
What benefits do financial market offer?
What benefits do financial market offer
What are benefits to a financial balance sheet?
What are benefits to a financial balance sheet?
What has the author Anne Patricia Villamil written?
Anne Patricia Villamil has written: 'Liquidity preference, costly state verification, and optimal financial intermediation'
What is Nigeria's economic system?
The Nigeria financial system is an important segment of the economy that ensures a smooth flow of funds from the surplus spending unit to the deficit spending unit through process of financial intermediation.
What are some benefits of retirement financial planning?
Some benefits of retirement financial planning include pensions, ensure future financial, provide information on financial planning, and many more. It really benefits the elders.
What financial benefits?
money.
