Financial transactions fairly without excess or deficiency by adjusting the needs and conditions of the entity that needs funds (consumer of funds) and the entity that intends to protect and manage surplus funds (supplier of funds). Is never easy to establish. Demanders of funds try to obtain the necessary funds (amount and period) at low cost, and suppliers of funds demand “yields and dividends” and “security and conservation”. Naturally, the purposes of both sides are conflicting, so it is necessary to make adjustments according to certain rules, and at the same time, it is essential to have a mechanism with such a function and the work of an organization that helps it.

Through the course of thousands of years, humankind has created an organization that bridges supply and demand, including mechanisms and rules that enable rational and smooth exchange of funds through numerous trials and errors


There are two models of “indirect finance” and “direct finance” as a mechanism to circulate funds by adjusting the needs and interests of consumers and suppliers of funds.

Indirect finance is a model in which a financial institution such as a bank (a financial institution that handles deposits and savings) enters between a consumer and a supplier of funds to make adjustments. Funds widely collected from the public in the form of deposits are supplied to fund consumers such as companies at the discretion and responsibility of financial institutions. The characteristic of indirect finance is that “the consumer and the supplier of funds do not face each other and each conducts a loan transaction with a financial institution individually”, so for example, a person who deposits in a bank lends his or her own money to where. It is not possible to know if it was done. Instead, even if a bank or other lender goes bankrupt and it becomes difficult to repay the principal and interest, the deposit will be protected as it is.

It can be said that it is convenient and safe for the provider of funds because it does not require the trouble of checking the creditworthiness of the lender, but it is large because part of the profits obtained from loans etc. will be the expenses and profits of financial institutions. There is also the disadvantage that it is difficult to obtain a yield.

In addition, for consumers of funds such as companies, it is easy to raise funds and it is possible to obtain funds quickly if the conditions required by financial institutions are met.


On the other hand, direct finance is a model in which a consumer and a supplier of funds directly lend and borrow while looking at each other’s conditions. However, companies cannot call on each and every citizen to lend or invest, and individuals cannot search for investment destinations, so we use the market to search for partners. At that time, the securities company provides support for market brokerage and closing of transactions.

By the way, in direct finance, “securities (certificates that describe property rights, etc.)” such as “bonds” and “stock certificates” are used for transactions, and most of them can be freely bought and sold in the secondary market.

What is important in direct finance is that the investor bears all responsibility for the investment made by the supplier of funds (called the investor). The financial institution that provides investment advice and support is not responsible for the consequences. In other words, in order to invest in securities, it is necessary to have a considerable understanding and knowledge of finance and investment, and provide such educational opportunities to the government and financial institutions, fair and easy-to-understand explanations, and advice commensurate with the level of investors. Etc. are required.

While you can expect dividends and trading profits that exceed the yields of deposits and other securities investments, there is also the risk that the investment principal will be significantly damaged. On the other hand, for fund consumers, it will be possible to procure funds under conditions that match the purpose of use of the funds, and even if supply is difficult with the indirect financial model, by building a scheme that is easy for investors to understand. It also has the advantage of being able to procure


From now until decades ago, indirect finance was heavily weighted in every country, and banks were said to play a leading role in finance. In particular, Japan and Germany achieved amazing economic growth in the world by making full use of the functions of indirect finance during the postwar reconstruction period, collecting funds from the people and sending them to industry. On the other hand, in the United Kingdom and the United States, systems for raising funds using the market were established from an early stage, and financial institutions such as securities companies and investment banks, which are in charge of direct finance, showed their presence as another leading role in finance.

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