Question

Explain why the same company can be a saver and a user of funds.

Answer 1

Answer:

1. A financial intermediary is typically an institution that facilitates the channeling of funds between lenders and borrowers indirectly.

2. That is, savers (lenders) give funds to an intermediary institution (such as a bank), and that institution gives those funds to spenders (borrowers). This may be in the form of loans or mortgages.

Answer 2

Banks do this.

Banks deposit money from the customers and also lend it to the customers in need. They save the money of those who earn, where they keep it for safety purposes. They also lend these as loans to those in need while acquiring a specific amount as interest, which would act as the commission for the loan lent. The interest earned through loans like gold loans, mortgages, etc. help the banks earn money.