Financial Intermediaries and The Euro Markets Essay

Financial Intermediaries and The Euro Markets - Essay sheathAccording to the research findings the fiscal environment therefore directly or indirectly influence the financial system of any country. Thus the need for financial intermediaries to act as the middlemen in this transactions is important. and then for investors to get profit and the lenders to be fitted to give away money to borrowers the need for financial markets atomic number 18 vital. Financial intermediaries can be defined as an institution that acts as the middlemen mingled with the investors and the firms. These financial institutions hold chartered banks, insurance companies, investment dealers, mutual cash, and pension funds. Liquidity has been the basis of these winsome of transactions in the midst of the parties all the borrowers or the investors. It can be defined as the ease with which a given plus can be budged into cash or by getting access to credit. Thus the main thought of liquidity is to obta in cash. Liquidity is often determined by two factors that measure how easy it is to change it into cash or make it possible for borrowers to obtain the cash. The policy amour rates and the structure of the interest rates paid by the borrowers are often the indicators of liquidity. These rates often influence one either to be motivated to borrow or leave the money with the banks. Most of the world banks are affect in market liquidity which is the rate at which a borrower is able to quickly buy or sell the financial assets at a given time without changing the market price. (Francis 2008). In the fresh world there are financial institutions that stand in between parties in any kind of transaction that entail cash. Thus Financial Intermediaries are firms that buy or borrow from consumers or savers and by and by lend these services or would be cash to other companies or persons that might need resources for investment. and then there are different kinds of investments. The insuranc e policies, buying of stocks, bonds, regime treasuries, and mutual funds. All these investments either involve the macrocosm investor or the government and the company. Investments that involve a company or the government selling to the public are good convertible to cash since the purpose of the public is to get cash for their daily living. Moreover, the investments by the government are more(prenominal) liquid than those in the company (Levine 1993). Mutual funds can easily be changed to cash than all the others while the others. Insurance policies since they are the contract or an agreement between the insurer and the insured are difficult to change into cash since one can only move over the amount after a certain incident happens that is often unkown when it will occur. The the government treasuries and mutual funds are just agreements that do not involve cash and thus take time to be converted to cash and the remaining are easily converted in this order Stocks, and bonds. Therefore in the order of their liquidity they would be mutual funds as the most liquid asset, then the government treasuries, bonds, stock, and then the insurance pilies as the least liquid asset. Conclusion Financial intermediaries therefore play a vital role in the national economy of any country. In most economies people with more money save them in banks that makes it possible for those with little money to borrow so that they would be able to use them either to run a business or other functions depending on their need. Thus a financial institution such as banks facilitate the flow of funds from savers to borrowers. The financial institutions profit from the stretch out between the amount they pay for funds and the