Menu Close
  • Author
  • Abstract
  • Table Of Contents
  • Citations
Latest posts by Jonathan Kush (see all)

This essay uses two theories of financial intermediation to explain the existence and role of banks. In doing this, we critically discuss and compare the two theories to discuss and carefully contrast the main theories of financial intermediation in the context of transaction costs, liquidity insurance, information asymmetry, and financing sources for borrowers.

NO CITATION FOR THIS WORK WAS RECORDED

International Financial Services Case Study


Key Learning Outcomes

By the end of the case, students should be able to:
  • Critically analyse key elements of the main theories of financial intermediation 
  • Clearly discuss and carefully contrast the main theories of financial intermediation in the context of transaction costs,liquidity insurance, information asymmetry, and financing sources for borrowers.
  • Understand contemporary banking theory

 

Use two theories of financial intermediation to explain the existence and role of banks. Critically discuss and compare the two theories. Refer to at least two journal papers in your coursework. 

1.0 INTRODUCTION


Banks have existed in many forms in many countries for many centuries initially involved in basic societal roles as taking and holding deposits for households and providing basic loans to economic agents in need of capital. As traders and merchants started to trade both locally and internationally, for example during the expansion of the different empires, insurance especially marine insurance became much sought after hence the emergency of banks such as Lloyds in England (Allen and Santomero 1997). Banks and other financial intermediaries began to offer such financial services, becoming the main source of external funds to firms. For instance, between 1970 and 1985, financial intermediaries were the main source of more than 50% of external funding in the UK, United States, Japan, Germany, and France (Diamond 1996). 

In this essay, we will use two theories, financial intermediation theory and the theory of risk management to explain the existence and role of banks. In doing this, we will critically discuss theories of financial intermediation in the context of transaction costs, information asymmetry, liquidity insurance and other elements of financial intermediation.

Already a Subcriber?

Forgotten your password? Click Here

Not a Subcriber?

GET UNLIMITED ACCESS

TO ALL OUR FREE SAMPLES

FOR
FREE

Services We are Offering

We are more than a free study and revision tool.
We also provide on demand research and custom writing services.


error: Copying this content is in breach of our Terms and conditions.

WELCOME

You are now Logged in.

To access your Dasboard please click the dashboard button in the Main Menu

Basic

Annual pass for 12 months​

Access to free sample essays
24/7 help from our expert writers & tutors
Access To premium strategy case studies
Free writing help for essays/reports
Extra writing help upto 2000 words free
Access to exam preparation study guides

£0

Premium

***Paid annually at £359.88

Access to free sample essays
24/7 help from our expert writers & tutors
Access To premium strategy case studies
Free writing help for essays/reports (5000 Words Free)
Extra writing help upto 2000 words free
Access to exam preparation study guides

£29.99

Popular

Standard

***Paid annually at £119.88

Access to free sample essays
24/7 help from our expert writers & tutors
Access To premium strategy case studies
Free writing help for essays/reports (2500 Words Free)
Extra writing help upto 2000 words free
Access to exam preparation study guides

£19.9£9.99

Premium

***Paid annually at £359.88

Access to free sample essays
24/7 help from our expert writers & tutors
Access To premium strategy case studies
Free writing help for essays/reports (5000 Words Free)
Extra writing help upto 2000 words free
Access to exam preparation study guides

£29.99