--%>

What can a financial institution do for a surplus

What can a financial institution frequently do for a surplus economic unit which it would have complexity doing for itself if the surplus economic unit (SEU) were to deal directly along with a deficit economic unit (DEU)?
Usually, Surplus economic units do not contain the expertise to find out whether deficit economic units can and will make good on their obligations, so it is hard for them to predict while a would-be deficit economic unit will not pass to pay what it owes. Such type of failure is likely to be devastating to a surplus economic unit which has lent a proportionately large amount of money.  on the contrary, a financial institution is in a better situation to predict who will pay and who won't. It is also at a better position, having greater financial resources, to sporadically absorb a loss while someone fails to pay. (It is just one example of the beneficial things financial institutions do for SEUs)

   Related Questions in Finance Basics

  • Q : Absolute and relative sizes of the

    Normal 0 false false

  • Q : Chartered banks Normal 0 false false

    Normal 0 false false

  • Q : Time Value of Money Problems on a Texas

    TVM Appendix B: Using the TI-83/84  Time Value of Money Problems on a Texas Instruments TI-831 Before you start:  To calculate problems on a TI-83, you have to go into the applications menu, the blue  “APPS” key on the calculator. Several

  • Q : What are Salaries and Wages Supplement

    Salaries and Wages Supplement: The annual publication issued in a while after the Governor's Budget, including a summary of all positions by department, unit, and categorization for the past, present, and budget years, as of July 1 of the present year

  • Q : Change in supply of money Normal 0

    Normal 0 false false

  • Q : Fin 235 Personal Finance Homework Fin

    Fin 235 Personal Finance Homework Chapter 8: Problems: 1, 3, 5, 7 1.   Most home insurance policies cover jewelry for $1,000 and silverware for $2,500 unless items are covered with additional insurance. If a family

  • Q : What is Debt Financing Debt Financing :

    Debt Financing: Whenever a firm raises money for the working capital or capital expenses by selling bonds, bills, or notes to individual and or institutional investors. In return for lending money, the individuals or institutions become creditors and

  • Q : Define Trigger Trigger : An event which

    Trigger: An event which causes an action or actions. The triggers can be active (like pressing the update key to validate input to a database) or passive (like a tickler file to repeat of an activity). For illustration, budget "trigger" mechanisms hav

  • Q : What is Working Capital and Revolving

    Working Capital and Revolving Fund: For legal base accounting purposes, fund categorization for funds employed to account for the transactions of self-supporting enterprises which render goods or services for a direct charge to the user that is genera

  • Q : Explain Administratively Established

    Administratively Established Positions: The positions authorized by the Department of Finance throughout a fiscal year that were not comprised in the Budget and are essential for workload or administrative reasons. These positions fin