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Week 1, Glossary - Coggle Diagram

- - - - Asset transformation (turning deposits into loans)
      - Credit risk tranasformation and diversification (low risk deposits turned into high risk loans)
      - Liquidity transformation (short term debt or deposit turned into long term assets or loans)
      - Economies of Scale (The larger the banks are, the cheaper intermediation becomes)
  - - - Allows access to non standers or unique products not offered by intermediaries
      - Direct financing saves cost on the intermediation
    - - Difficulty in matching preferences between surplus and deficit units
      - Higher risk of liquidity and marketability of direct finance instruments
      - Higher search and transaction costs
      - Difficulty in assessing risk