FINANCIAL INTERMEDIARIES

Financial Intermediaries

Financial intermediariesIntroduction

Financial intermediation refers to the institution, company or person who mediates between two or more parties. These institutions facilitate the mobilization of funds between lenders and borrowers (Arshadi Karels 2007). These agencies are engaged in bringing both sides together by borrowing funds from lenders and lending their borrowers so that both sides find a deal more favorable than if they traded with each other directly.

BenefitsFinancial intermediaries provide two important advantages for investors (Lewis 2005). First, lending through an intermediary is usually less risky than lending directly. The main reason for reducing the risk is that the financial ...