Role of Financial Institution and Intermediaries
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Added on 2020-01-28
Role of Financial Institution and Intermediaries
Added on 2020-01-28
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·······Institutional Financial Management·
Table of ContentsIntroduction......................................................................................................................................2Q-1...............................................................................................................................................3Q-2...............................................................................................................................................4Q-3...............................................................................................................................................6Q-4...............................................................................................................................................7Q-5. ............................................................................................................................................8Q-6...............................................................................................................................................9Conclusion.......................................................................................................................................9References........................................................................................................................................1··········
·IntroductionFinancial institution and intermediaries are played a prominent role in the success of aeconomy. These financial institution are promote and support to maintaining and developing aeconomy. These financial institution involves banks, mutual funds, investment companies,insurance companies, international financial institution etc. The purpose of this report is toidentify and analyses the various functions of a central bank in the developing a economy(Orlitzky, 2011). It also analyses that how financial crises 2007-2008 affects the global marketand the market of mortgage backed securities. Apart from that it also analyse that how acompany can raise their funds from various sources with the help of investment banks. l壱Q-1.Ans. Financial intermediaries is a institution which to support the saving/investment cycle inthe economy. It is a type of middleman between saver and borrower. It played a significant roleto develop a sound economy of the country (Lounsbury, 2008). It include commercial banks,Insurance companies, cooperative banks, mutual funds and other financial institution. There arevarious roles which is played by these financial institution for the economy are as follows:Self-employment programme: Employment is any country significant for their economy. Anemployment growth rate in the economy is symbol of economic development. These financialinstitutions provide finance to them for starting their business employment. So that theseemployment programme can generate more income and production in the economy (Cornett, andat al., 2007). Entrepreneurial Development Programmes: These programme can help to developingentrepreneurial skill and provide finance to their business activities. There are variousprogrammes which supported by these intermediaries. Integrated Rural development scheme: There are various rural development initiative supportedby these financial intermediaries. These institutions provide financial assistance to the peoplefrom the rural areas through providing them loans to start their economic activities with aaffordable interest rate. Housing Finance: These financial intermediaries are also provide affordable housing loans to thepeople. They are collecting money form people as a saving and than this money can be used tolanding these money as housing loan.
Priority Sector: There are various priority sector which is set by the government. These prioritysectors in UK includes to support entrepreneurial skills, providing loan in rural areas, providefinancial assistance and support to small and medium business. Backward area Development: These financial institutions also help to development of backwardarea. In order to prevent regional and economic disparities in the economy, they provideadvancing loans to different sectors and industries (Barzelay, and Gallego, 2006). It also benefitsto these financial intermediaries is that government also give some amount of tax benefits tothem which increase the profitability. Introduction of Electronic system: Technology is a key area which can support the economy.These financial institutions can also support to creating and developing a electric system in theeconomy. l壱Q-2.Answer. Key functions of bank of England: There are various function and role of bank ofEngland. There are following function are as follows:Bankers to the government: The key function of this bank is to help government account withthe bank. Government payment are made by the banks only it also received the money fromother as a government authority. The bank hold large number of accounts of governmentsecurities. The short term and long term lending are made by this bank only. The bankers' bank: This bank are the banker of all commercial banks in UK. All domestic bankshave an account with the bank of England. This banks hold a substantial amount of these banks. Bankers to other central banks: Bank of England have various accounts for outside or overseascentral banks and international financial institutions for the international payment settlement. Exchange control: The bank another function is to control on foreign exchange and maintain thebalance of payment. These exchange control are not applied on the resident of UK for settlementtheir payment in the country (Liang, and at el., 2007). Agent for the Government: The bank also responsible to maintain the treasury managementsystem in the economy. They responsible for to effective exchange control in the economy. Four functions of federal reserve: There are following functions of Federal reserve:Control on the money supply: The bank played an important role in the money supply in theeconomy. It is main function of the bank is to maintain the sound financial position of thecountry through full and effective control over the money supply.
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