The Asymmetric Information Approach to Financial Crises

Financial institutions argon organizations that involved in providing various types of monetary services to their customers. The fiscal institutions are controlled and supervised by the rules and regulations define by the government authorities. Financial institutions include banks, credit unions, addition management firms, building societies, and stock brokerages, among others. These institutions are responsible for distributing financial resources in a planned way to the potential users. thither are a number of institutions that collect and provide gold for the necessary sector or individual. On the other hand, there are several institutions that dissemble as the middleman and fall in the deficit and surplus units. The roles of international financial institutions are modulate by the international laws as they are operational in more than one country. The shareholders or the possessors of the international financial institutions are national governments of the countries.




In the past financial institution act as the intermediaries where intermediary is a third party that offers mediation services between two trading parties but in today world financial institution acts in thought-provoking position as the Internet is creating a transparent awareness on the threats and opportunities available to automate intermediaries in many industries.

The sub-prime crisis alter everyone. The credit crisis brings 2 groups of people together the home owner and the investor. The home owners represents their mortgages which is their houses and the investors represents their money in larger institutions such as pension funds, sovereign funds, insurance companies, mutual funds and and so forth This groups were brought together to form the financial system. In order to hold the economy strong, the Federal Reserve chairman lower cumulation the interest rates to only 1%. With only 1% interest rates, it provides a very low return on the investment and investor stop investing in treasuries bill. In the...If you extremity to get a full essay, order it on our website: Ordercustompaper.com



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