In: Finance
Why are there so many different financial intermediaries other than commercial banks? How does an investor’s risk attitude and/or wealth play a role in his/her selection of a financial institution or intermediary?
Ans ) Financial intermediary : Financial intermediary is an institution or individual that serves as a middle men among diverse parties in order to facilitate the financial transactions.
There are so many financial intermediaries other than commercial banks :
Different financial intermediaries such as hedge fund , insurance company,etc operated in the same sense as commercial banks.financial system send fund from saver to borrower . borrower send return back to save through financial system.
there are different types of financial institution because there are different needs that people need . 1 )insurance companies are needed to pay for claim of their clients , pension are used for individual that are saving for retirement and invested into stocks and bonds ,and hedge fund are higher risk portfolio investment that used by mostly by wealthy .
Investors risk attitude play a role in the selection of financial intermediaries :
An investor that has wealth or a high risk attitude is more likely to choose a financial institutions that is going have greater return on their investment Even if it's high risk investment .
investors that are saving for the future or is limited in wealth is more likely to invest in a financial institutions that are safe and low risk .
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