Banks serve as intermediaries between savers and borrowers from "summary" of The Economics of Money, Banking and Financial Markets, eBook, Global Edition by Frederic S. Mishkin
In the financial system, banks play a crucial role as intermediaries between savers and borrowers. Savers deposit their funds in banks, seeking a safe place to store their money and earn a return. Banks, in turn, use these deposits to provide loans to borrowers who need funds for various purposes such as buying a home, starting a business, or investing in projects. By accepting deposits from savers and offering loans to borrowers, banks facilitate the flow of funds in the economy. This intermediation process is essential for the efficient allocation of resources and the smooth functioning of financial markets. Without banks acting as intermediaries, savers and borrowers would have a harder time finding each other and matching their needs. Banks also play...
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