Financial intermediation

Financial intermediation is an activity of financial intermediaries.Financial intermediaries help to reconcile different requirements of borrowers and lenders.Bad debts would be borne by the financial intermediary in its re-lending operations.They provide obvious and convenient ways in which a lender can save money.They can package up the amounts lent by savers and lend on to borrowers in bigger amounts.They provide for a risk reduction.They provide a ready source of funds for borrowers.

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