Why Do Financial Intermediaries Exist? - Bandenia Formula Capital LTD

1
Bandenia Formula Capital LTD
Why Financial Intermediaries Exist?
2
About Bandenia Formula Capital LTD

• Bandenia Formula Capital LTD is an UK based
  Financial Intermediary take part in securities
  exchanges and utilizes long-term plans for
  managing and growing their funds.
• Bandenia Formula Capital LTD offers a number of
  benefits to the average consumer,
  including safety, liquidity, and economies of
  scale involved in banking and asset
  management.

3
Why Financial Intermediaries Exist?

• Financial intermediaries exist because they
  improve on unintermediated markets in which the
  'ultimate' parties (such as borrowers and savers,
  or firms and investors) deal directly with each
  other without the use of any intermediary.
  Following are main points that
• Shows why financial intermediaries exist

• Information Costs
• Monitoring Costs
• Liquidity Costs
• Transaction Costs

4
Information Costs

• Information Costs incurred by both borrowers and
  lenders before they enter into transaction. e.g.
  Lenders shall evaluate borrowers
  riskness collecting information on their credit
  history and financial stability. FIS provide
  lenders with such information and can easily
  match borrowers and lenders needs
  without making them spend time and
  resources in collecting and interpreting
  information (evaluation costs).

5
Monitoring Costs

• After the parties enter into agreement, lenders
  (savers) that shall monitor the actions of the
  borrowers (users) in order to assess the
  borrowers reliability and the profitability of
  their investment.

6
Liquidity Costs

• Lenders of funds e.g. households, may have strong
  disincentive in lending funds to a
  Commercial Bank as they will reduce their
  liquidity (cash available to buy food and other
  goods or front unexpected expenses). FIs like
  Depository Institutions provide households of a
  sound tradeoff between their liquidity level
  and the economy borrowing needs households can
  deposit cash into a bank and withdraw it
  any time.

7
Transaction Costs

• Lenders of funds e.g. households, may have strong
  disincentive in lending funds to a
  Commercial Bank as they will reduce their
  liquidity (cash available to buy food and other
  goods or front unexpected expenses). FIs like
  Depository Institutions provide households of a
  sound tradeoff between their liquidity level
  and the economy borrowing needs households can
  deposit cash into a bank and withdraw it
  any time.

8
Final Thoughts

• In general terms, FIs allow for a more efficient
  allocation of resources in the economy by
  reducing the disincentives savers may face in the
  lending activity. They serve as conduits
  smoothening the functioning of capital market and
  increasing the lending activity.
• Studies proved that States development is closely
  related to the level of capital availability and
  so to the development of Financial
  Intermediaries.
• Content Source http//www.digitaljournal.com/pr
  /5030835
• https//bandeniaformulacap
  ital.medium.com/
• https//bandeniaformulaca
  pital.tumblr.com/
• https//www.reddit.com/us
  er/bandeniaformula
• https//bandeniaformulaca
  pital.blogspot.com/
• https//bandeniaformulaca
  pital.wordpress.com/

9
Thank You!!!