Financial intermediary

Economic function

Main article: Financial system

Financial intermediaries channel funds from those who have surplus capital to those who require liquid funds to carry out a desired activity.{{cite book | url-access = limited

Financial intermediaries may deal in personal finance, such as loans and mortgages; corporate finance, including private equity and venture capital investments; and non-commercial finance such as project finance, climate finance and development finance.

Various disadvantages have also been noted in the context of climate finance and development finance institutions. These include a lack of transparency, inadequate attention to social and environmental concerns, and a failure to link directly to proven developmental impacts.

Types of financial intermediaries

According to the dominant economic view of monetary operations, the following institutions are or can act as financial intermediaries:

• Banks
• Mutual savings banks
• Savings banks
• Building societies
• Credit unions
• Financial advisers or brokers
• Insurance companies
• Collective investment schemes
• Pension funds
• Cooperative societies
• Stock exchanges

According to the alternative view of monetary and banking operations, banks are not intermediaries but institutions that create money.

References

Bibliography

• Pilbeam, Keith. Finance and Financial Markets. New York: PALGRAVE MACMILLAN, 2005.
• Valdez, Steven. An Introduction To Global Financial Markets. Macmillan Press, 2007.

References

1. (2013). "Global Shadow Banking Monitoring Report 2013". Financial Stability Board.
2. Infinite Financial Intermediation, 50 Wake Forest Law Review 643 (2015), available at: http://ssrn.com/abstract=2711379
3. Siklos, Pierre. (2001). "Money, Banking, and Financial Institutions: Canada in the Global Environment". McGraw-Hill Ryerson.
4. Gahir, Bruce. (2009). "Financial Intermediation".
5. Robert E. Wright and Vincenzo Quadrini. Money and Banking: Chapter 2 Section 5: Financial Intermediaries.[http://www.saylor.org/site/wp-content/uploads/2012/06/ECON302-1.2-1st.pdf] Accessed June 28, 2012
6. Institute for Policy Studies(2013), "[http://climatemarkets.org/glossary/financial-intermediaries.html Financial Intermediaries]", A Glossary of Climate Finance Terms, IPS, Washington DC
7. Eurodad (2012), "[http://eurodad.org/1540077/ Investing in financial intermediaries: a way to fill the gaps in public climate finance?] {{Webarchive. link. (2012-08-29 ", Eurodad, Brussels)
8. Bretton Woods Project (2010)"[http://www.brettonwoodsproject.org/art-567190 Out of sight, out of mind? IFC investment through banks, private equity firms and other financial intermediaries]", Bretton Woods Project, London
9. "The currently dominant intermediation of [[loanable funds]] (ILF) model views banks as [[barter]] institutions that intermediate deposits of pre-existing, real, [[loanable funds]] between depositors and borrowers. The problem with this view is that, in the real world, there are no pre-existing loanable funds; and ILF-type institutions do not exist. Instead, banks create new funds in the act of lending, through matching loan and deposit entries, both in the name of the same customer, on their [[Balance sheet. balance sheets]]. The financing-through-money-creation (FMC) model reflects this, and therefore views banks as fundamentally '''monetary institutions'''. The FMC model also recognises that, in the real world, there is no [[Money creation#Money multiplier. deposit multiplier]] mechanism." From [http://www.bankofengland.co.uk/research/Documents/workingpapers/2015/wp529.pdf "Banks are not intermediaries of loanable funds — and why this matters"] {{Webarchive. link. (2015-06-11, by [http://michaelkumhof.weebly.com/vitae.html Zoltan Jakab] and [[Michael Kumhof]], [[Bank of England]] Working Paper No 529, May 2015)