Microeconomic Foundations of Financial Intermediaries
The „Development and Finance“ Series X
X The "Development and Finance" Series The "Development and Finance" Series We define "development" as a change for the better in the living conditions of as large a number of people as possible: more opportunities in life, more freedom and more social justice. A precondition for this kind of change, and at the same time a part of it, is the improvement or modernization of economic mechanisms and institutions. Thus, although development always means more than merely quantitative economic growth, it is nonetheless true that growth helps to foster - and indeed, in some respects, is a necessary precondition for - development in the broader sense of the term. As with "development", we also use the concept of "finance" in a very broad sense. Finance takes in the entire financial system and thus the complete range of possibilities for obtaining external funds, accumulating financial assets, providing financial security against risks, and conducting payment transactions, which are available to the people of a region, a country or indeed a group of countries. Of course, at the hub of the financial system are the financial markets and the financial institutions, in particular the banks and the services they provide. Yet the foundations on which the financial system is built consist of people and their economic activities and problems - in other words, the real economy. Even if there were no such thing as money, no financial institutions or financial markets, people would still have to invest and save, to handle risks and...
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