Financial intermediaries bridge the gap between savers and borrowers from "summary" of Financial Markets and Institutions, Global Edition by Frederic S. Mishkin,Stanley G. Eakins
Financial intermediaries play a crucial role in the economy by connecting those who have excess funds to those who need funds. The process of channeling funds from savers to borrowers is essential for economic growth and development. Savers deposit their money with financial intermediaries such as banks, mutual funds, and insurance companies. These intermediaries then use these funds to provide loans to individuals and businesses who need capital for various purposes. By doing so, financial intermediaries help to allocate resources efficiently in the economy. Financial intermediaries help to reduce the cost of borrowing for borrowers by pooling funds from many savers and lending them out at a higher interest rate. This allows borrowers t...
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