Question

What is the role of financial intermediaries in an economy?

Answer 1

Answer:

The job of financial intermediaries is to connect borrowers to savers. For example, A bank loan is a form of indirect finance. Financial intermediaries perform the vital role of bringing together those economic agents with surplus funds who want to lend, with those with a shortage of funds who want to borrow.

Explanation:

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Answer 2

Financial Intermediaries are basically financial organizations including banks,credit lending agencies or unit trust companies,which facilitates financial transactions or exchange between lenders and borrowers.

Explanation:

Major Roles of Financial Intermediaries:-

• The most important function of financial intermediaries is to act as the main facilitator of financial exchange in the economy such as banks or any similar certified financial institutions.
• Financial intermediaries can act as a storage for financial and valuable liquid assets such as banks.
• Providing different types of financial loans at various interest rates to borrowers both in short and long term.
• Offering various savings and investment schemes/options for customers such as fixed deposit,mutual fund options or systematic investment plan.
• Many financial intermediaries offer various lucrative interest rates for certain amount of financial deposits in savings or other investment accounts.