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In financial terms, what is disintermediation? When is it likely to occur?

Question:

In financial terms, what is disintermediation? When is it likely to occur?

Finance:

Finance refers to the study of money, its creation, and management. Every individual or institute needs financial planning. Because of this, finance has been categorized into three parts, i.e., public, personal, and corporate.

Answer and Explanation: 1

Financial Disintermediation

Financial disintermediation refers to removing middlemen such as banks and brokers. Financial disintermediation helps in lowering the cost of the transactions and promotes fast transactions.

Likely to occur

  • Cost Revenue Implications: When there is a need for cost reduction in the overall investment process and increase the level of revenue, financial disintermediation is applied.
  • Trends: With the introduction of the internet, the middlemen have disappeared. The internet provides an effective and efficient way of conducting transactions. It eliminates the role of banks and brokers.

Learn more about this topic:

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Types of Financial Planning Models

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Chapter 4 / Lesson 2
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In this lesson, we'll discuss financial planning in business. We'll explore the use of models to create, implement, and evaluate financial plans. An example will be used to illustrate the concepts of the lesson.


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