ECS3701 Assignment 2 Full Solutions Semester 2 2024 (833935) - DUE 27 September 2024
14 views 2 purchases
Module
Monetary Economics (ECS3701)
Institution
University Of South Africa
Book
Monetary Economics
ECS3701 Assignment 2 (COMPLETE QUESTIONS & ANSWERS) Semester 2 2024 (833935) - DUE 27 September 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)...........
2.01 Discuss how collateral and indirect ...
ESC3701 Assignment 4 (COMPLETE ANSWERS) 2024 (628263) - DUE 23 July 2024
ESC3701 Assignment 3 (COMPLETE ANSWERS) 2024 (628170) - DUE 18 June 2024
ESC3701 Tutorial Letter 2024 WITH All 2024 Assignments (COMPLETE ANSWERS)
All for this textbook (8)
Written for
University of South Africa
Monetary Economics (ECS3701)
All documents for this subject (83)
Seller
Follow
LIBRARYpro
Reviews received
Content preview
ECS3701
ASSIGNMENT 2 SEMESTER 2 2024
UNIQUE NO.833935
DUE DATE: 27 SEPTEMBER 2024
, ECS3701
Assignment 2 Semester 2 2024
Unique Number: 833935
Due Date: 27 September 2024
Monetary Economics
2.01: Collateral and Indirect Finance in Explaining Financial Structure
Collateral and indirect finance play key roles in understanding how financial systems
operate worldwide. Collateral refers to assets that a borrower offers to a lender to
secure a loan. It's like a safety net for lenders because, if the borrower defaults, the
lender can seize the collateral to recover their losses. This is crucial because many
borrowers, especially businesses or individuals with less creditworthiness, may not be
able to get loans without offering something valuable as a guarantee.
Indirect finance involves financial intermediaries, like banks, who stand between
borrowers and savers. Instead of lending money directly, savers deposit funds into a
bank, and the bank then lends those funds to borrowers. This system makes financing
more accessible and efficient, as it allows banks to assess credit risks, bundle deposits,
and provide loans to a wider pool of borrowers.
These two factors—collateral and the role of intermediaries in indirect finance—explain
why direct finance (where borrowers go directly to investors) is much less common
globally. Most borrowers lack the reputation or scale to raise funds directly, so they rely
heavily on banks and other intermediaries, who in turn, ask for collateral to manage risk.
This is how most financial systems are structured, with intermediaries playing a major
role in ensuring money flows smoothly between those who need it and those who have
it.
2.02: Financing Government Deficits: Monetizing Debt and Printing Money
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LIBRARYpro. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £2.21. You're not tied to anything after your purchase.
