- Insurance and diversification
- Finance of large, illiquid assets with small, liquid liabilities
- Enabling current borrowing against future, uncertain income streams
- Reducing transaction costs
- Promotion of better corporate governance
The larger context of Brad's post is to question whether the financial sector's increased share of GDP over the past six decades has contributed to economic growth. Given how much of the financial sector is no more socially useful than a casino, I don't see how that could be the case. Worse, the "house" and several of the "players" in this casino have used their growing resources to subvert our political institutions into believing that their institutions are "too big to fail."