Explanation Financial intermediation and financial innovation increase the options for borrowers and thus make available the credit in the economy. This credit can be used in the expansion or day to day activities of businesses and consequently this will contribute to the economic growth as well. For banks, these two things make the burden of banks lesser by providing borrowers an option. Financial intermediaries apart from bank are called non-banking finical intermediaries. They are substitutes to the banks as far as borrowing is concerned...

The effect of financial intermediation and financial innovation on banking and the economy. Concept Introduction: Financial Intermediation - It is an activity in which some institutions take liabilities to their accounts and facilitate both lenders and borrowers. Financial Innovation - It is an act of creating a new financial instrument, market or institution and then propagating it.

MYLAB ECONOMICS WITH PEARSON ETEXT -- A

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Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

Chapter 1, Problem 2LO

To determine

The effect of financial intermediation and financial innovation on banking and the economy.

Concept Introduction:

Financial Intermediation - It is an activity in which some institutions take liabilities to their accounts and facilitate both lenders and borrowers.

Financial Innovation - It is an act of creating a new financial instrument, market or institution and then propagating it.

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