financial intermediary

(noun)

A financial institution that connects surplus and deficit agents.

Related Terms

Examples of financial intermediary in the following topics:

  • Institutions, Markets, and Intermediaries

    • A financial intermediary is an institution that facilitates the flow of funds between individuals or other economic entities.
    • Though, perhaps the most well-known of financial intermediaries, banks represent only one intermediary within a larger group.
    • As noted, financial intermediaries provide access to capital.
    • By repurposing funds from savers to borrowers financial intermediaries are able to promote economic growth by providing access to capital.
    • Banks convert deposits to loans and thereby increase access to capital by serving as a financial intermediary between savers and borrowers.

  • Role in Matching Savings and Investment Spending

    • Stocks and bonds are considered to be important intermediary forms of savings as these get transformed into a capital investment that produces value .
    • Financial intermediaries can assist with increasing the incentive to save through developing financial products that offer ease of liquidation but provide a higher return than a savings account.
    • In this manner, financial intermediaries are a significant component to the transformation of savings into investment.
    • Mutual funds, pension obligations, insurance annuities, and other forms of savings marketed by financial intermediaries all consist of stocks, bonds, and cash balances, which in turn pay for the investment capital that increases productivity, efficiency and output of goods and services.

  • Role in Providing a Market for Loanable Funds

    • Loanable funds are typically cash, but can also include other financial assets to serve as an intermediary.

  • Corporations

    • Large businesses are important to the overall economy because they tend to have more financial resources than small firms to conduct research and develop new goods.
    • Owners of a corporation also have limited financial liability; they are not responsible for corporate debts, for instance.
    • By the mid-1990s, more than 40 percent of U.S. families owned common stock, directly or through mutual funds or other intermediaries.
    • The CEO supervises other executives, including a number of vice presidents who oversee various corporate functions, as well as the chief financial officer, the chief operating officer, and the chief information officer (CIO).

  • The Role of the Financial System

    • A financial market or system is a market in which people and entities can trade financial securities, commodities, and other fungible items.
    • A financial market or system is a market in which people and entities can trade financial securities, commodities, and other fungible items .
    • Financial markets are associated with the accelerated growth of an economy.
    • Investment: Financial markets play a crucial role in arranging to invest funds.
    • Equity markets are the most closely followed of the financial markets.

  • The Financial Account

    • The financial account measures the net change in ownership of national assets.
    • When financial account has a positive balance, we say that there is a financial account surplus.
    • Likewise, we say that there is a financial account deficit when the financial account has a negative balance.
    • Such intervention affects the financial account.
    • This contributes to a financial account surplus.

  • The Capital Account

    • The capital account acts as a sort of miscellaneous account, measuring non-produced and non-financial assets, as well as capital transfers.
    • Under the International Monetary Fund (IMF) definition, however, most of these asset flows are captured in the financial account.
    • The capital account is normally much smaller than the financial and current accounts.
    • The capital account can be split into two categories: non-produced and non-financial assets, and capital transfers.
    • Non-produced and non-financial assets include things like drilling rights, patents, and trademarks.

  • A Nation of Investors

    • Between 1989 and 1995, the portion of all U.S. households owning stocks, directly or through intermediaries like pension funds, rose from 31 percent to 41 percent.

  • Natural Resource Market

    • Some must be acquired through direct purchases without the use of an intermediary clearing house.

  • The Federal Reserve and the Financial Crisis of 2008

    • The Fed responded to the financial crisis with conventional open market operations and unconventional credit facilities and bailouts.
    • Further, this type of financial crisis meant that banks' assets were suddenly worth far less; open market operations can ensure that these banks have the liquidity they need to carry out their financial activities.
    • Investors, banks, and other financial institutions came under pressure as their mortgage-based assets lost value.
    • Others praise the Fed for avoiding an even deeper financial crisis.
    • Summarize the monetary policy tools used by the Federal Reserve in response to the financial crisis of 2008.