Show how a financial intermediary can solve problems that ultimate savers and borrowers cannot easily solve when dealing directly with each other

Essay specific features

 

Issue:

Business

 

Written by:

William F

 

Date added:

November 6, 2010

 

Level:

University

 

Grade:

A

 

No of pages / words:

9 / 2278

 

Was viewed:

8414 times

 

Rating of current essay:

 
Essay content:

However, the direct method is an expensive and inefficient method of lending as it gives rise to many problems relating to information costs, administration costs, portfolio preferences, risk, lender of last resort and contracts and enforcement. Problems associated with the direct route and the ways in which intermediaries can solve these problems will be identified: Information costs Search costs Savers and borrowers have to find each other, obtain information about each other, meet each other and negotiate a contract...
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Problems associated with the direct route and the ways in which intermediaries can solve these problems will be identified: Information costs Search costs Savers and borrowers have to find each other, obtain information about each other, meet each other and negotiate a contract. If dealing directly with each other, the individuals concerned would have to incur these costs...
displayed next 300 characters

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