Financial Intermediaries

  • The Role of Financial Intermediaries

    Imagine that you are the president of Blue Skies Airlines, Inc. and you have decided that Blue Skies should buy a new Boeing 777. The plane will cost $125 million and change. There is one small problem though. Blue Skies only has a few million dollars in its bank account, and those funds are needed to pay fuel bills and the salaries of its employees.

    How can Blue Skies get enough money to buy this new airplane? It can by tapping into the savings flows of the economy, and this chapter explains how that actually happens.

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