Banking infrastructure, Microeconomics

Banking Infrastructure:

An efficient financial system can influence the long-term growth through three important channels, namely: 1) increase in the proportion of saving transferred to investment spending, 2) augmenting private saving rate, and 3) improvement in the social marginal productivity. The financial intermediaries stimulate economic growth in two ways: (i) by channeling the individual saving into productive areas of development and (ii) by allowing the individuals to reduce risk associated with their liquidity needs. The creation of specialised financial institutions assumes significance in this regard because supply of credit to the poor involves high risk and carries exorbitant interest rates. The task of the special financial institutions would be to identify impediments to enhancing the productivity of existing assets and to find ways and means to overcome these and simultaneously to promote viable economic activities for the rural poor.   

Posted Date: 11/10/2012 7:44:39 AM | Location : United States







Related Discussions:- Banking infrastructure, Assignment Help, Ask Question on Banking infrastructure, Get Answer, Expert's Help, Banking infrastructure Discussions

Write discussion on Banking infrastructure
Your posts are moderated
Related Questions
what is the value in 10 years of 1 million dollars if interes rates are 4%?

Select the production possibilities curve for an economy with 42 units of labor

An economist's view of costs contains both explicit and implicit costs.  Explicit costs are accounting costs, and implicit costs are the opportunity costs of an allocation of resou

The following represents the potential outcomes of your first salary negotiation after graduation: Assuming this is a sequential move game with the employer moving first, indicate

During summer of 2006, China increased their reserve requirement for the banking system while maintaining a fixed target for the interbank lending interest rate. Draw a graph of th

why use GNP in macroeconomichs analysis

The law of supply is that producers will supply more the higher the price of the commodity.  The supply curve is an upward sloping function showing a direct relationship among pric

Assume that John has the following preference relation over two goods, bread and bear (x1, x2). He strictly prefers any bundle x over y whenever x haves more bear than y, whatever

Distinguish between the terms of trade and the balance of trade. Basic explanation of the terms of trade as the average price of exports in relation to the average price of imp

A local airline charges $500 to fly (round-trip) to Louisville, Kentucky. From the past three months, whereas the $500 fare has been in effect every of the two daily flights have a