BANKING AFFAIRS

Detailed explanation-1: -Banks as Financial Intermediaries. Banks act as financial intermediaries because they stand between savers and borrowers. Savers place deposits with banks, and then receive interest payments and withdraw money. Borrowers receive loans from banks and repay the loans with interest.

Detailed explanation-2: -Banks serve as financial intermediaries by acting as a bridge between savers and borrowers. Savers make bank deposits, then earn interest costs and withdraw funds. Borrowers obtain bank loans and repay them with interest.

Detailed explanation-3: -Banks are the most common financial intermediaries: Banks convert deposits to loans and thereby increase access to capital by serving as a financial intermediary between savers and borrowers.

Detailed explanation-4: -In this sense, a financial intermediary serves as a bridge between the optimists’ excessively high beliefs about project success and the pessimists’ excessively low beliefs.

Detailed explanation-5: -Banks are a financial intermediary-that is, an institution that operates between a saver who deposits money in a bank and a borrower who receives a loan from that bank. All the funds deposited are mingled in one big pool, which is then loaned out.