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Financial Markets & Institutions - Coggle Diagram
Financial Markets & Institutions
Financial System
Competition
Among banks
For deposits
Drive
CD rates
Up
Loan rates
Down
Banks
Profit-making
Organizations
Consumer savings
Small dollar amounts
Origin
Money
Funds
Large business loans
Allocate
Money
Most productive
Investment projects
Banks & Lenders
Earn profit
Spread
Between
Lending rates
Borrowing rates
Financial Markets
Markets
Financial claims
Financial institutions
Facilitate
Flows of funds
From
Savers
To
Borrowers
Economic units
Financial needs
Households
Supply labor
Demand products
Save for future
Businesses
Demand labor
Supply products
Invest
Productive assets
Governments
Collect taxes
Provide public goods
Economics of Financial Intermediaries
Financial Intermediaries
Exist
Due
Market Imperfections
Transaction costs
Information costs
Asymmetric Information Problems
Adverse selection
Moral hazards
Competition
Pulls
Interest rates
Down
Financial Intermediaries
Services
Transform claims
Denomination Divisibility
Pool savings
Many small SSUs
Into
Large investments
Currency Transformation
Buy & Sell
Financial claims
Various currencies
Maturity Flexibility
Offer
Different ranges
Maturities
DSUs & SSUs
Credit Risk Diversification
Assume
Credit risks
DSUs
Spread
Risk
Over
DSUs
Liquidity
Give
SSUs & DSUs
Different choices
When
What extent
How long
Commit
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