The significant role of financial intermediaries Essay

The significant role of financial intermediaries - Essay Example In the process of redistributing savings into productive uses, financial intermediaries combine small savings into substantial pools of capital which are re-lent to a wide number and variety of borrowers, or invested in various forms of securities, thus providing risk diversification and liquidity. Intermediation is defined as the placement of money with a financial intermediary which invests in bonds, stocks, mortgages, loans, money market securities and government obligations to achieve targeted returns. Essential to understanding the intermediation market is the existence of a direct credit market where borrowers or investors meet and transact financial business directly with the providers of funds. An example is a cash-rich business which purchases a commercial paper directly from a finance company. Another would be a household that buys a new share of stock of an industrial company from a stockbroker which underwrote the issue. No financial intermediary was involved here because it was not necessary. A financial intermediary plays a significant role only when hindrances or inefficiencies can occur, such as when the denomination, maturity, and other security characteristics do not match exactly the desires and requirements of the SSU. When a household has available funds of only â‚ ¤500, it would not be able to participate in buying a bond issue denominated at â‚ ¤5000 each. Financial intermediaries come into the picture when it buys direct claims from the DSUs with specific security characteristics (maturity, denomination, and liquidity) and sells indirect claims to SSUs packaged to conform to the specific requirements of the market.

Dangers of Web 2.0 Essay Example | Topics and Well Written Essays - 1000 words

Dangers of Web 2.0 - Essay Example They may not explore a site that they do not agree with; very easily they can do another search and find what they are looking for. People tend to go to sites that have similar views or opinions as themselves.   By gaining information from traditional media sources they are exposed to many â€Å"different political and socioeconomic and cultural identities†.  Ã‚   Lanier also agrees with Keen that as Web 2.0 has progressed people have lost their individuality and joined more collective or community web sites Lanier does not like that â€Å"People tend to loose themselves in group think†. On this issue Keen and Lanier have similar thoughts on problems with Web 2.0.   It is important for people to listen and hear multiple sides of an issue.   A person should explore other theories or thoughts.   Many times they find similarities or they may even agree with the other side’s arguments if they listen to their thoughts behind their ideas.   An example of th is is a political campaign.   Many people in our society are Republican or Democrats because that is what their family’s political affiliation has been.   They have not taken the time to listen to the other political party’s thoughts on the issues and where they stand.   Many times when someone from the other party is giving a speech, they won’t listen to them.   More than likely a republican is not going to go to a democrat’s website to educate themselves on their side of the issue.