An overview of the financial system - Function of financial intermediaries: Indirect finance
3 important questions on An overview of the financial system - Function of financial intermediaries: Indirect finance
How to reduce the problem of AS and MH?
· Better equipped to screen out bad from good credit risk, reducing losses due to AS
· Expertise in monitoring the parties they lend to, reducing losses due to MH
· Expertise in monitoring the parties they lend to, reducing losses due to MH
What are the economies of scope?
lower the cost of information production for each service, by applying one information source to many ≠ services
What is conflict of interest?
· a person or institution has multiple objectives (interest), some of which conflicting with each other.
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