Financial Intermediation Flashcards
What are examples of transaction cost?
Search costs, auditing cost and monitoring costs
What theory implies that the financial intermediaries bear transaction costs?
Transaction costs theory
_______ costs are borne by financial intermediaries to retain the assurance of their customers
Agency cost
______ risks arise from how the public perceives financial intermediaries
Reputational risks
_____ theory postulates that financial intermediaries must monitor their investments activities to avoid losses
Delegated monitoring theory
Liquidity transformation theory postulates the transformation of ___________ to __________
Deposit liabilities to Liquid loan asset
The commitment of the financial intermediaries lie with the ______________ as postulated by the _________
Depositors or customers / commitment mechanism theory
_________ expresses the desire of people to have a steady path of income
Consumption smoothing theory
Who is the third party in direct financing?
The financial intermediaries
What financing has unlimited limit to access of funds?
Indirect financing
The structures of financial intermediation can be grouped into how many?
5
Who comes first in the financial intermediation hierarchy
Commercial banks
Non-bank institutions rank ______ in the financial institutions hierarchy?
3rd
_________ is a flow variable while ________ is a stock variable
Saving and Savings
_______ refers to any means of generating future revenue?
Investment
