{"id":251115,"date":"2023-06-21T05:13:51","date_gmt":"2023-06-21T05:13:51","guid":{"rendered":"https:\/\/imarticus.org\/?p=251115"},"modified":"2024-04-02T05:36:02","modified_gmt":"2024-04-02T05:36:02","slug":"investment-banking-and-the-role-of-financial-intermediation","status":"publish","type":"post","link":"https:\/\/imarticus.org\/blog\/investment-banking-and-the-role-of-financial-intermediation\/","title":{"rendered":"Investment Banking and the Role of Financial Intermediation"},"content":{"rendered":"
Investment banking now plays a vital role in the <\/span>derivatives market<\/span> as well as the <\/span>money market<\/span>. It is one of the most essential financial practices that help upgrade the nation's economy.<\/span><\/p>\n However, the role of financial intermediaries is much more pivotal in the case of investment banking. They act as a catalyst between two parties in a transaction. They come with tons of benefits to a consumer regarding safety, liquidity, and economies of scale. Even though in most cases, investment bankings try to eliminate the intervention of an intermediary, it curbs much more threats than in other areas of finance.\u00a0<\/span><\/p>\n In this article, let's learn in detail about financial intermediation<\/strong>, alongside its types and roles to play in the financial sector.\u00a0<\/span><\/p>\n To put it into simple words, a financial intermediation is a catalyst that acts as a middleman between two parties in a financial transaction. Financial intermediation is commonly used by investment banks, commercial banks, and mutual funds. It is a very beneficial catalyst for an average consumer that ensures the utmost safety of the bank and its assets.\u00a0<\/span><\/p>\n Financial intermediation often forms a safe environment for conducting financial transactions seamlessly. It is also a very flexible form of a catalyst and is not only restricted to third-party lenders and borrowers. Financial intermediation also holds the liability to adhere to the reserve bank and stock exchange guidelines.\u00a0<\/span><\/p>\n Financial intermediation is not only limited to mutual funds and commercial banks. It is a huge spectrum and regulates various transactions inside a safe environment. Here are some examples of financial intermediation that would help you to understand its key functions in detail. They are:\u00a0<\/span><\/b><\/p>\n Investment banking is one of the best ways to incorporate financial intermediation<\/strong>. They primarily create a central platform for intermediation enabling both parties for financial transactions. This is efficient from both sides.\u00a0<\/span><\/p>\n Here are some roles that investment banks generally play when it comes to financial intermediation. They are:\u00a0<\/span><\/p>\n Banks are primarily known to safeguard your money and also maintain a lender-borrower relationship with you from time to time. In layman's terms, banks earn money and offer their services in exchange for receiving payments via interest and other fees. Banks are also under commission for selling a financial product.\u00a0<\/span><\/p>\n Be it an investment bank or a commercial bank, both of them generate profit primarily by granting loans or providing fruitful investments. For investment banks, profit maximisation holds paramount importance. They are only achieved through stock market products, commodities, and real estate.\u00a0<\/span><\/p>\n In other words, financial intermediaries in a capital market are known as brokers. They help the investor to choose from a suitable stock market they would like to explore and buy their shares. For their brokerage, the investor has to pay a reasonable amount to their brokers for their service.\u00a0<\/span><\/p>\n Sometimes these brokers or financial intermediaries focus on electronic exchanges for direct trading. The brokers primarily work for Fintech companies offering customers low-cost access to stock exchange products. These financial intermediaries finance themselves via commissions which are further received from brokering securities of electronic exchanges.\u00a0<\/span><\/p>\n Financial intermediation comes with both advantages and disadvantages. However, one has to dodge the disadvantages and take 'advantage' of their merits. Let's find out what they are:\u00a0<\/span><\/p>\n Conclusion\u00a0<\/strong><\/p>\n The existence of financial intermediation is not a new concept but has been in existence for decades. However, with digital transformation, the use of financial intermediation is reduced from time to time.\u00a0<\/span><\/p>\n If you are interested to know and learn in detail about <\/span>risk management<\/span>, the <\/span>derivatives market,<\/span> and the <\/span>money market<\/span> alongside getting an <\/span>investment banking certification online<\/a><\/strong>, check out <\/span>Imarticus Learning's Certified Investment Banking Operations Professional course<\/span>. You do not need any prior experience in investment banking and you can opt for this course if you are a Finance graduate. This is one of the best <\/span>investment banking course<\/span>s in existence and has provided over 40,000 placements.\u00a0<\/span><\/p>\n For more details, check out the website right away! Or Contact us through the chat support system, or visit one of our training centers in Mumbai<\/a>, Thane, Pune<\/a>, Chennai, Bengaluru, Delhi<\/a>, Gurgaon, or Ahmedabad<\/a>. Investment banking now plays a vital role in the derivatives market as well as the money market. It is one...<\/p>\n","protected":false},"author":1,"featured_media":175381,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[22],"tags":[3928,4334,4335,4336],"pages":[],"coe":[],"class_list":{"0":"post-251115","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance","8":"tag-derivative-markets-course","9":"tag-investment-banking-and-role-of-financial-intermediaton","10":"tag-certified-investment-banking-professional-course","11":"tag-career-in-investment-banking-industry"},"acf":[],"yoast_head":"\n<\/p>\n
What is Financial Intermediation?\u00a0<\/strong><\/h2>\n
Types of Financial Intermediation\u00a0<\/strong><\/h2>\n
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Role of Financial Intermediation in Investment Banking\u00a0<\/strong><\/h2>\n
Banks\u00a0<\/strong><\/h3>\n
Capital Markets\u00a0<\/strong><\/h3>\n
Advantages and Disadvantages of Financial Intermediaries\u00a0<\/strong><\/h2>\n
Advantages<\/strong><\/h3>\n
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Disadvantages\u00a0<\/strong><\/h3>\n
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\n<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"