清华大学宏观经济学Chapter-20.pptxVIP

Chapter 20The Financial SystemIN THIS CHAPTER, YOU WILL LEARN:the functions a healthy financial system performsthe common features of financial crisesgovernment policies to alleviate or prevent crisesWHAT THE FINANCIAL SYSTEM DOES1. Financing InvestmentThe financial system helps channel funds from savers—households with income they do not need to spend immediately…to investors—firms that need funds to finance investment projectsWHAT THE FINANCIAL SYSTEM DOES1. Financing InvestmentFinancial system: the institutions in the economy that facilitate the flow of funds between savers and investors The financial system includesfinancial markets, like the stock market, through which households directly provide funds for investmentfinancial intermediaries, like banks or mutual funds, through which households indirectly provide funds for investmentWHAT THE FINANCIAL SYSTEM DOES1. Financing InvestmentDebt finance: selling bonds to raise funds for investment A bond represents a loan from the bondholder to the firm.Equity finance: selling stock to raise funds for investmentA share of stock represents an ownership claim by the shareholder in the firm. WHAT THE FINANCIAL SYSTEM DOES1. Financing InvestmentFinancial intermediaries accept funds from savers and direct them to investors. For example, banks accept deposits from households and make loans to firms.Other examples: mutual funds, pension funds, and insurance companies WHAT THE FINANCIAL SYSTEM DOES2. Sharing RiskMany people are risk averse: other things equal, they dislike uncertainty.The financial system allows people to share risks:Investors can share the risk that their projects will fail with the savers who provide the funds.Savers may be willing to accept these risks for the prospect of a higher return than they could earn otherwise.WHAT THE FINANCIAL SYSTEM DOES2. Sharing RiskMany people are risk averse: other things equal, they dislike uncertainty.The financial system allows people to share risks:Savers