CHAPTER 1
FINANCIAL INSTITUTIONS
4ND INTERMEDIATION
CHAPTER OVERVIEW
This chapter:
o Analyzes the role of financial institutions in society.
o Describes the process of financial intermediation.
o Differentiates direct and indirect financing.
o Outlines recent changes in the financial services industry in terms of domestic and international competition.
o Describes financial markets.
KEY TERMS
capital market
deficit savings unit
denomination intermediation
direct financing
financial institutions
financial intermediation
financial markets
indirect financing
information intermediation
maturity intermediation
money market
net interest margin
primary markets
primary security
risk intermediation
secondary markets
secondary security
surplus savings unit