Financial Intermediaries: Types and Functions

__Financial intermediaries__ connect buyers and sellers in the financial system. They are integral in helping individuals and companies achieve their financial goals and include commercial, mortgage, and investment banks; credit card companies; brokers and exchanges; dealers and arbitrageurs; clearinghouses; investment funds; and insurance companies. How might you describe the role that credit card companies play as a financial intermediary?

That's right!

Incorrect.

Such _financial intermediaries_ offer an efficient way of allowing consumers to purchase goods and services from merchants. These companies stand between a buyer and a seller, or multiple buyers and sellers, and facilitate the transfer of capital and risk between them. They also support the robust trading activities that occur in the markets in which buyers and sellers conduct business.

But suppose that credit card companies no longer existed in the marketplace. How might their absence impede the flow of commerce?

Incorrect.

Correct.

Credit card companies are one of the types of financial intermediaries at the heart of global commerce. They offer buyers a method of payment that is widely accepted by merchants and in a form that is often more efficient than using cash. The purchase and sale of goods and services would surely be adversely impacted by their absence, but commerce would not dry up entirely. Buyers and sellers still have other means of conducting business, albeit in a manner that might not be as efficient.

In summary: [[summary]]

The billing statements that credit card companies provide to their customers can be very helpful from a record-keeping perspective. However, it is a credit card company's role in supplying cardholders with credit that is central to their role as an intermediary.

The billing services they provide allow card users to see their transactions in a concise manner

They provide cardholders with an efficient means of making purchases using credit

Few, if any, transactions would take place in this new reality

The purchase and sale of goods and services would be hampered

Continue

Continue

Continue