Accounting Information 2

1 A monetary intermediator can be outlined as a fiscal institution that connects surplus and deficit agents. The classic example of a financial intermediary is a bank that transforms bank deposits into bank loans. Through the process of financial intermediation, certain assets or liabilities are transformed into different assets or liabilities. As such, financial intermediaries channel funds from people who imbibe extra money (savers) to those who do not have becoming money to carry out a desired activity (borrowers). For instance in the US, a financial intermediary is typically an institution that facilitates the channeling of funds between toters and borrowers indirectly. That is, savers (lenders) face funds to an intermediary institution (such as a bank), and that institution gives those funds to spenders (borrowers). This whitethorn be in the form of loans or mortgages. Alternatively, they may lend the money directly via the financial markets, which is known as financial disintermediation. According to the book titled The Theory of Financial mediation by Bert Scholtens, and Dick van Wensveen ,SUERF Studies; 2003/1, functions of financial intermediary has been tumesce discussed.

The tendency towards an increasing role of financial intermediation give the Relative contribution of the financial sector to the two pick out items of economic Wealth and welfare in most nations, i.e. GDP and labor. These show that, flush in highly developed markets, financial intermediaries tend to play a substantial and increasing role in the current economy. Furthermore, Demirgüç-Kunt and Levine (1999) among others, desist that claims of deposit money banks and of other financial institutions on the hugger-mugger sector have steadily increased as a percentage of GDP in a large number of countries (circa 150), rich and poor, between the 1960s and 1990s. In the 1960s, Raymond Goldsmith (1969) gave stylized facts on financial structure and economic development. He found that in... If you expect to get a full essay, order it on our website: Ordercustompaper.com

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