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Financial Markets and Institutions - Essay Example
Finance & Accounting
Pages 6 (1506 words)
FINANCIAL MARKETS AND INSTITUTIONS Name of the student Finance and Accounting Date Financial Markets and Institutions Role and functions of the Financial Intermediaries A financial intermediary is any institution or organization that is able to move money from borrowers and savers…
Financial intermediaries have played a major role the development and growth of the world’s economy. The financial institutions such as banks and other financial institutions such as microfinance institutions, investment ventures, and Sacco’s provide funds for the development of businesses operations. The Financial intermediaries help investors to save to improve their living conditions. For example, finance institutions give loans to small enterprises and individuals who make take less risky loans but give high returns in terms of interest rates. These returns are used to provide loans for other investors. Banks and credit unions take money that has been saved and use the money to give loans to investors; mutual funds take contributions from a group of investors and invest in a high investment requiring assets which individual investors would not have been able to invest in alone thereby spreading the risk. Financial intermediaries that encourage savings include retirement benefits institutions, housing finance institutions, insurance companies, and mutual funds where members of the public are encouraged to save for their old ages, investment purposes, and better housing. ...
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