Brokerage firms act as agents for their clients in securities transactions at a fee. The brokerage companies offer advice to their clients on the type of securities to invest in capital markets and manage their portfolio activities.
The trust companies act as trustees for their clients to manage their funds and estates. The trustee agents advise their clients on opening trust accounts to invest their savings. They also provide investment advice on asset and portfolio management.
Barclays Bank advances loans to individuals from deposited money. These loans require security in the form of a property. Interest is charged on the loan. The difference in the lending and deposit rate is the bank’s profit. They include:
b) Cash credit: - Advanced to current account holders and other who do not maintain accounts with the bank. It is given against the security of a tangible asset. Interest is charged on the amount withdrawn in excess.
The Central Bank acts as the issuer of currency notes and coins that function as the medium of exchange and unit of account in transactions. This helps in monetary policy and determining the amount of money to flow in an economy.
The Central Bank functions as a controller of commercial banks in the country. It controls lending and borrowing rates, minimum reserve ratios and discount rates. The Central Bank thus controls inflation levels thus ensuring stability in the ...
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(Financial System and Intermediaries Essay Example | Topics and Well Written Essays - 1000 Words)
“Financial System and Intermediaries Essay Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.net/finance-accounting/778605-financial-system-and-intermediaries.
The researcher states that the regulation of the financial global market is a problem as there are risks involved in the foreign currency. Some writers argue that most of the firms in the different parts of the world might be experiencing difficulties due to the trading activities rather than banking.
(Morawski, 2012) Nevertheless, for a progressive and thriving economy, it is imperative for the financial institution to equip them with the awareness regarding the various risks and benefits that prevails in the market. This report elaborates on the characteristics of a financial intermediary and how the consumers derive benefits from it.
This way, money flows from one hand to another via financial intermediaries. The article which is used to explain the whole structure of financial intermediaries is given in the references ( Kopcke, 2008)
There are many reasons for which these financial intermediaries are important for the local financial system.
The most fundamental contribution that any financial system makes is to channel resources from individuals and companies with surplus resources to those with resource deficits. The financial system not only satisfies savings needs of the economy but also facilitates the accumulation of investment capital that is critical to growth and development.
Financial markets facilitate the lending of funds from saving to those who wish to undertake investments. The various forms of IOUs are known collectively as financial instruments. Such instruments, which also are called securities, are claims that those who lend their savings have on the future incomes of borrowers who use those funds for investment.
Brodie and Merton (1995) determined the most aggregated level of the single primary function of resource allocation to further distinguish the six basic functions performed by the financial system. These are the following:
In order to give way in the entry of goods, services and assets, a financial system should provide ways of clearing and settling payments.
An SSU (normally the household sector) is one where income exceeds consumption, and a DFU, consisting normally of businesses and government, is one where current expenditure exceeds current income and external sources of funds must be found to make up for or supply the difference.
That foundation has come under fire as a result of financial crises that have come in more rapid intervals, and increased depth.
Based upon conditions and circumstances, individuals as well as companies borrow funds over the long term in capital markets (Scholtens and
They are non-banking and banking institutions which transfer funds to economic agents with a deficit unit from economic agents with surplus units. Two types of financial intermediaries exist namely bank financial intermediaries, like commercial banks and central bank, and non-bank financial intermediaries.
6 Pages(1250 words)Essay
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