logo image

Money and Banking

Mishkin wrote many arguments concerning the U. S. financial system. Essentially, the basic argument of Mishkin is that many of the structural aspects of the U. S. financial system can be explained in terms of transactions costs and asymmetric information problems. The arguments of Mishkin in this topic is convincing since he was aware that financial markets is vital to the way people save their funds in line with productive investment schemes. In this juncture, Mishkin is also fully aware of the economic downturn which is a result of the defective financial system.

Primarily, Mishkin argued that transaction costs and size of securities post caused huge financial problems country (Docstoc. com, 2009, p. 1). The role of financial intermediaries or banks in preventing any harm or risks to investors is vital in this aspect. Secondarily, Mishkin also disclosed the asymmetric information which reflects that while moral risk exist after a transaction and relates to activities the borrowers performed, which is unwanted to the lender, but which the lender is not aware of (Docstoc.

com, 2009, p. 1). This phenomenon results to the financial breakdown and difficulties of some investors. In connection, the asymmetric information analysis has something to do with Enron bankruptcy

Need essay sample on "Money and Banking"? We will write a custom essay sample specifically for you for only $ 13.90/page

scandal. Some borrowers of the investors that are connected with Enron performed activities that are inimical to the business operation of the company. Besides, the leaders of the company also performed activities that caused moral hazard to the said business organization.

Finally, analysis of both transaction cost and asymmetric information which is related to financial structure is vital in understanding the U. S. economy. Hence, Mishkin is convincing in providing the aforementioned arguments. References Docstoc. com. 2009. Mishkin, Chapter 8: An Economic Analysis of Financial Structure. Retrieved April 29, 2009, from http://www. docstoc. com/docs/2374208/MISHKIN -CHAPTER-8-An-Economic-Analysis-of-Financial-Structure.

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
×
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register

Already on Businessays? Login here

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
Sign in / Sign up
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Join and witness the magic
Service Open At All Times
|
Complete Buyer Protection
|
Plagiarism-Free Writing

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy