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RBA Glossary definition for financial institution

financial institution – A company whose primary function is to intermediate between lenders and borrowers in the economy.

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Policy Discussion

27 Oct 2008 RDP 2008-06
Jonathan Kearns and Philip Lowe
Doing so can reduce illiquidity premia that apply to these assets and reduce the possibility that solvent financial institutions find themselves needing to seek emergency support. ... While financial institutions benefit from these services, these
https://www.rba.gov.au/publications/rdp/2008/2008-06/policy-discussion.html

The Provision of Systemic Liquidity Services by the Public Sector

27 Oct 2008 RDP 2008-06
Jonathan Kearns and Philip Lowe
As discussed above, it is possible that social welfare is improved if financial institutions do not have to fully self-insure against system-wide liquidity problems. ... Doing so may also lead to financial institutions reducing their holdings of other
https://www.rba.gov.au/publications/rdp/2008/2008-06/pro-systemic.html

The First-best and the Real World

27 Oct 2008 RDP 2008-06
Jonathan Kearns and Philip Lowe
Indeed, some financial institutions had included the possibility of securitisation in their contingency planning for a liquidity crisis. ... According to this perspective, liquidity insurance has been underpriced for too long and many financial
https://www.rba.gov.au/publications/rdp/2008/2008-06/first-best.html

An Increase in Holdings of Liquid Assets

27 Oct 2008 RDP 2008-06
Jonathan Kearns and Philip Lowe
But full self-insurance against generalised and widespread disruptions could come at a significant cost to both financial institutions and the economy more broadly. ... The extent to which financial institutions insure against system-wide liquidity
https://www.rba.gov.au/publications/rdp/2008/2008-06/inc-holdings.html

Promoting Liquidity: Why and How?

27 Oct 2008 RDP 2008-06
Jonathan Kearns and Philip Lowe
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/2008/2008-06.html

Introduction

27 Oct 2008 RDP 2008-06
Jonathan Kearns and Philip Lowe
of increased uncertainty, can have significant implications for financial institutions, and the economy as a whole. ... Second, recent events have shown up shortcomings in the way that financial institutions manage their own liquidity, and these
https://www.rba.gov.au/publications/rdp/2008/2008-06/introduction.html

Promoting Financial Infrastructure that Reduces Information Asymmetries

27 Oct 2008 RDP 2008-06
Jonathan Kearns and Philip Lowe
Here, there are a number of possibilities, including: further improving disclosure by financial institutions; improving the credit rating process; and improving settlement procedures, including facilitating the increased use of central counterparties
https://www.rba.gov.au/publications/rdp/2008/2008-06/pro-financial.html

References

27 Oct 2008 RDP 2008-06
Jonathan Kearns and Philip Lowe
Brunnermeier MK and LH Pedersen (forthcoming), ‘Market Liquidity and Funding Liquidity’, Review of Financial Studies. ... Fitz-Gibbon B and M Gizycki (2001), ‘A History of Last-Resort Lending and Other Support for Troubled Financial Institutions in
https://www.rba.gov.au/publications/rdp/2008/2008-06/references.html

Reasons for Asset Market Illiquidity

27 Oct 2008 RDP 2008-06
Jonathan Kearns and Philip Lowe
As financial markets have matured, various ways of ameliorating the effects of asymmetric information have developed. ... But, acknowledging that these initiatives may not always be successful or be possible, we then consider how to mitigate the impact
https://www.rba.gov.au/publications/rdp/2008/2008-06/rea-for-asset-market-illiquidity.html