INTRODUCTION TO FINANCIAL SERVICES Essay Example | Topics and Well Written Essays - 2000 words - 1

INTRODUCTION TO FINANCIAL SERVICES - Essay Example The unique characteristic of the financial intermediary here is that their assets and liabilities are overwhelmingly financial.2 The financial intermediaries succeed by using customer’s savings (who save in order to maximise the savings but with minimal risk) to lend to investors (who fights to get the money at the cheapest rate as possible but with less strings attached) with the aim of making a return on their investments for themselves and their customers. Their main role can be said to be channelling of customer’s savings to investors who so need the money to make meaningful investments that give rise to an economic growth and development for the society.3 The financial intermediary strives to make the better deal of a large profit as possible from these savings as to keep the institution running. (See appendices 2) According to J.O. Sanusi (2002), availability of investible funds for investment in any economy can be said to be the key factor in the growth process of that economy especially as it is realised that these funds are a necessary condition for output production and employment growth. Efficient financial intermediaries through the role they play in any economy are of course seen as the best means of achieving higher levels of output production, employment, and income which invariably enhance the living standards of the population. It cannot be argued therefore that countries that have enjoyed or are enjoying economic prosperity such as the Western countries are having such an efficient mechanism for mobilising financial resources and allocating same for productive investment.4 Banks long ago were considered as the best intermediary since they are able to provide an important positive means of mobilising the savings from customers, and allocating these funds to the investors for finance investment projects