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What is the relationship between securitization and the role of financial intermediaries in the economy? what happens to financial intermediaries as securitization progresses?

Sagot :

The relationship between securitization and financial intermediaries is that they are directly related. When securitization progresses the financial services provided by financial intermediaries should also increase.

An intermediary is a person that helps to link the saver and the borrower of the market. These help to increase the financial transactions that take place, especially in the case of a commercial bank. Securitization is the process by which the assets are grouped and sold together as one in the form of security.

Securitization breaks or reduces the financial intermediary role as it provides people to participate in the market. So when the securitization rate increases, the financial intermediaries, are also required to provide the services that will help in faster liquidity of assets to several customers. As securitization progresses the financial services should also be increased simultaneously by the financial intermediaries.

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