BANDENIA FORMULA CAPITAL LTD-Financial Intermediaries

Banks and Insurance Companies, both are considered as a type of financial intermediaries. However, even though they have a few similarities, they don’t have as much in common as one might think. The operations in both of these financial intermediaries are based on different models that create some notable differences between them.  In this article, Jose Miguel Artiles Caballos, the director of Bandania Formula Capital LTD , explains the key differences between the two financial intermediaries, i.e. banks and insurance companies.  To understand the differences between them, it is important to understand them individually. Now, we know that banks and insurance companies are both financial intermediaries, but their model of operation is different. Insurance Companies : An insurance company makes sure that its customers don’t face certain risks, such as the risk of having a car accident, or the risk of the house catching fire. In return for this risk insurance, the customers pay t...

Financial Intermediaries are usually engaged in bringing together the big borrowers and big lenders. Their main objective is to convert savings into investments and charge a certain amount of fee for providing their services, which is called Intermediation Cost.  Similar to the Intermediation cost, Financial Intermediaries have many different characteristics and features, based on their type. Jose Miguel Artiles Ceballos, the director of Bandenia Formula Capital LTD , is an expert in financial intermediaries and identifies them with the following characteristics.  Risk Reduction : When compared to individuals, financial intermediaries have greater resources to bear and spread the risk among different individuals. Moreover, since financial intermediaries are experts in managing diversified portfolios, it reduces the risk through diversification.  Apart from this, financial intermediaries carefully screen and examine the borrowers, which greatly reduces the risk of def...