The Different Types Of Financial Intermediaries

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Published: 12th December 2010
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Many types of financial intermediaries coexist in our current economy. Though different, financial intermediaries have all one function in common. That is, they purchase financial claims with one set of characteristics from borrowers and sell financial claims with different characteristics to the lenders and engage in best forex trading markets. This is what it means to be a go-between i.e. in an intermediary.

For examples the major financial intermediaries in our economy and their growth rates between 1980 and the year 2000 had a growth rate of 9.6%. This rate of growth was faster than the economy as a whole which only grew at about 6%. The largest financial intermediaries in the US economy are commercial banks but the fastest-growing intermediaries or mutual funds and money market funds. The rapid growth rate of financial intermediaries reflect the growth in indirect securities issued, the increase in the proportion of funds being channeled through the intermediation market and the tremendous wealth created by the US economy during the decade before the millennium.

Financial intermediaries are classified as deposit type institutions, contracts will savings institutions, investment funds, or other types of intermediaries that are specialized in nature. These financial intermediaries meet different needs for different borrowers and lenders and provide forex trading tips. Could you imagine the implications for investment in physical assets such as oil refineries or long-distance telephone companies if financial intermediaries were not available to lend money over long periods of time such as 100 years. Financial intermediaries makes these kinds of loans possible for large corporate borrowers as well as providing interest-bearing securities for lenders who are risk adverse.

As with all things that work in theory they often do not work in practice. Whether or not this is the case for financial intermediaries is arguable. But one point that can be agreed upon is that when there is selective enforcement of financial regulations as well as corruption and corporate malfeasance such a system is bound to fail when villainy reigns supreme.

Rhab Hendrik is an author who shares his best forex trading articles with others. He likes to help people learn forex trading and learn forex trading strategies.

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