FINANCIAL INTERMEDIARY

Financial intermediary- An institution, firm,

individual who performs intermediation between two or more parties in a financial context Financial intermediaries 1. Banks 2. Building societies 3. Credit unions 4. Financial advisor/ broker 5. Insurance companies 6. Mutual funds

Bank
Commercial or state institution that provides

financial services, including Issuing money Receiving deposits Lending money Processing transactions Creating credit Spread- Differential between the level of interest it pays for deposits and other sources of funds and the level of interest it charges in its lending activities Bank derives from the Italian word banco meaning desk

Building society
Financial institution owned by its members, that

offers banking and other financial services especially mortgage lending UK In 19th century Compete with banks 2007 60 building socities Total assets exceeding pound s305 billion

Credit Union
Cooperative financial institution that is owned and

controlled by its members Difference: members who have accounts in the credit union are owners of the credit union Board of Directors elected by and from the membership itself They govern the policies relating to interest rates Only members can deposit, borrow money from it Viewed as non profit organizations Profit making for their members Pay higher dividend on deposits

Financial advisor
Professional who renders investment advice and

financial planning services to individuals and businesses Helps client to maximize their net worth by proper asset allocation Use stocks, bonds, mutual funds and insurance products to meet the need of the clients Fee based

Insurance
Risk management

Insurer
Insured Premium A contract whereby one party called the insurer

or the insurance company undertakes and compensate the other party called the insured, for any loss or damage suffered by the latter, in consideration of payment of premium for a certain period of time is termed as an insurance.

Mutual funds
Collective investment fund

Small savings
Collective investments are promoted aiming

target geographic regions/ specified themes( technology)