--%>

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 : Illustrate a market of fictitious

    Illustrate a market wherein the equilibrium dollar price of one unit of fictitious currency Zee is $5 (the exchange rate is $5 = Z1). Then illustrates on your diagram a decline in the demand for Zee. a. Referring to this diagram, d

  • Q : Private closed economy based question

    Normal 0 false false

  • Q : Financial crisis during 1997-1998

    Describe the Financial crisis during the time period of 1997-1998 ?

  • Q : Define the term Technical Technical :

    Technical: In the budget systems, refers to an amendment which clarifies, accurate, or else does not materially influence the purpose of a bill.

  • Q : Define the term State Fiscal Year

    Define the term State Fiscal Year: This is the period beginning from July 1 and continuing through the subsequent June 30.

  • Q : Define Subcommittee Subcommittee : The

    Subcommittee: The smaller groupings into which the Senate or Assembly committees are frequently divided. For illustration, the fiscal committees which hear the Budget Bill are classified into subcommittees usually by departments or subject area (examp

  • Q : Investors prospects of growth Why might

    Why might investors overestimate the prospects of growth companies and underestimate value companies?

  • Q : What is Detail of Appropriations and

    Detail of Appropriations and Adjustments: A budget display, for each association, that replicates appropriations and adjustments by fund source for each of the character of expenditure, (that is, State Operations, Local Assistance, and Capital Outlay)

  • Q : What is Uniform Codes Manual Uniform

    Uniform Codes Manual (UCM): It is a document sustained by the Department of Finance that sets standards for codes and different other information employed in state fiscal reporting systems. Such codes recognize, for illustration, prog

  • Q : Define Current Year Current Year (CY):

    Current Year (CY): It is a term utilized in budgeting and accounting to designate the operations of the current fiscal year in contrast to past or future periods.