BFC1001 Lecture 7: BFC1001 - W7 - Financial Institutions
8 Aug 2018
School
Department
Course
Professor
Document Summary
Financial institutions are an essential part of the financial system because: They allow capital to be efficiently transferred from surplus units to deficit units through intermediation. Without them, people would have to seek other people directly which is not efficient. They provide the infrastructure for the payments system (atms, internet banking, etc) Collectively, they provide the transmission mechanisms for monetary policy (they can increase or decrease the cost of debt in the economy) Without them, the economy would be unable to develop as consumption, financing and investment would be severely impaired and limited to the immediate geography. Financial institutions provide intermediation and the system of payments in the domestic and global economy, allowing for the safe and efficient; Payments of large sums of money without the need for physical cash. Currency exchange and international payments across borders. Types of financial institutions: authorised deposit-taking institutions (adis) Building societies (don"t have shareholders & major source of capital is retained earnings)
