SOCIOL 1000 Chapter Notes - Chapter 5: Chicago Mercantile Exchange, Credit Default Swap, American International Group
Document Summary
Economy/society - bruce g carruthers and sarah l. babb. Even finance the economic phenomenon that seems most abstract and divorced from social life is profoundly shaped by nonmarket social phenomena, including government regulation. Finance covers a broad range of institutions (e. g. , stock markets, banks, central banks, credit rating agencies) and activities (lending, borrowing, rating, investing, regulation, intermediation, and so on) Financial systems intermediate between savers and borrowers: by pooling savings and transferring them to activities that are deemed sufficiently productive and profitable to warrant investment. Banks earn a profit by receiving higher interest payments on its (typically long term) loans than it pays out in interest to its (typically short term) depositors. The two parties to a loan are not equally well informed (i. e. , information asymmetry exists) Banks don"t discriminate among savers, but they do differentiate among would-be borrowers. Low income households have less to save than high income households.
