Abstract
For an economy to grow, it is important that the allocation of funds is efficient and that financial intermediation runs deep (Cull and Xu, 2000). Poor financial intermediation can be the result of information asymmetries, loans rationing, the mispricing of transactions, poor monitoring of behaviour, a lack of monitoring and enforcement mechanisms for contracts, and so on. All other things being equal, banks (Table 6.1) should be in a better position to allocate funds than, for example, bureaucrats because of their expertise in the analysis and management of risks.
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© 2011 Violaine Cousin
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Cousin, V. (2011). Financial Intermediation. In: Banking in China. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/9780230306967_6
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DOI: https://doi.org/10.1057/9780230306967_6
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-32344-9
Online ISBN: 978-0-230-30696-7
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