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Financial System and Intermediaries - Essay Example

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Investment banks invest the money it receives from clients on a collective basis, and each investor gets a portion of the…
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Financial System and Intermediaries
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Financial System and Intermediaries

Download file to see previous pages... Brokerage firms act as agents for their clients in securities transactions at a fee. The brokerage companies offer advice to their clients on the type of securities to invest in capital markets and manage their portfolio activities.
The trust companies act as trustees for their clients to manage their funds and estates. The trustee agents advise their clients on opening trust accounts to invest their savings. They also provide investment advice on asset and portfolio management.
Barclays Bank advances loans to individuals from deposited money. These loans require security in the form of a property. Interest is charged on the loan. The difference in the lending and deposit rate is the bank’s profit. They include:
b) Cash credit: - Advanced to current account holders and other who do not maintain accounts with the bank. It is given against the security of a tangible asset. Interest is charged on the amount withdrawn in excess.
The Central Bank acts as the issuer of currency notes and coins that function as the medium of exchange and unit of account in transactions. This helps in monetary policy and determining the amount of money to flow in an economy.
The Central Bank functions as a controller of commercial banks in the country. It controls lending and borrowing rates, minimum reserve ratios and discount rates. The Central Bank thus controls inflation levels thus ensuring stability in the ...Download file to see next pagesRead More
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