Finance they also has a lower risk in

Finance
can be describe as a way or methods that related to obtain, controlled, used
,and allocating the funds (Ciuhureanus et al, 2009). Bank can be said as a
financial service that able to provide a basic services and properly works in
economy, politics, international law that control profit opportunities,
interest rate, currency, exchange rates , and a certain resources for the bank
(Drig?,2006).

          Act as a financial intermediaries for
people and businesses

Bank as a financial
intermediaries has a role channeling fund from surplus unit to the deficit unit.
Finance has main function as a provider for credit( Elliott et al, 2013). Bank
lowering transaction cost to pool assets, they transform deposit which is short
term liquid asset into illiquid long term assets which is loan (Diamond and
Rajan, 1998).Small business need support and opportunities to increase their
productivity, UOB help them in the process so they can go through different
stages of growth. Small businesses operating efficiency is crucial and they
need help to improve it. They need cash flow and capital for funding the
business so UOB as an intermediaries help them by gathering money from savers
and give it as a loan. UOB giving out loan more than $1.8 billion to 8500 small
business in Singapore and Malaysia (UOB, 2016). In Singapore, UOB offered
collateral-free working capital loan, SME working capital loan and UOB
BizMoney. (UOB, 2016). BizMoney allows higher loan up to $650.000 million with
flexible payment period up to five year without requiring any collateral it
will make small business easier to obtain capital and payback the credit
because they just started their business and maybe don’t have enough
collateral. Improve in small business will increase their business value that
will lead to increase in country economic growth or can be said it will give
good impact for both sides. Credit encourage economic activity for businesses
and it can help development of agriculture, trade and industry.

 

Bank function in asset
transformation

Other
than role as an intermediaries between the surplus unit and deficit unit, bank
has a role in transformation. Deficit unit tend to has a higher risk of
defaulting in their payment because they seek large size loan for long period
and in the other hand the surplus unit save small sized loan and seek for short
term deposit they also has a lower risk in defaulting their payment. Bank
transformation include size, maturity, risk and liquidity. ALCO approved UOB
framework policies, controls, and limits in liquidity. These policy involve
control, and limits for bank to enable and monitor the group to make sure that
the bank has enough fund resources over range of market conditions. Minimizing
excessive funding by diversify the sources and terms of funding and also high
quality portfolio and marketable debt securities. Financial intermediaries
investigate investor’s savings in various business sector, they transform risk
by diversifying it so they can bear risk more efficiently. They also do risk
screening, risk monitoring and risk evaluation, it helps individual save time
and money. Without financial intermediaries it will be difficult for individual
to screen borrower prospect and investment opportunities and it will affect
savers decision from lending money and it will give an impact in economic
development

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