ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A financial intermediary is typically an institution that facilitates the channeling of funds between lenders and borrowers indirectly. That is, savers (lenders) give funds to an intermediary institution (such as a bank), and that institution gives those funds to spenders (borrowers).

Detailed explanation-2: -Financial intermediaries are institutions that borrow funds from savers and lend them to borrowers, providing risk-sharing, liquidity, and information services in the process.

Detailed explanation-3: -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-4: -Bank. A bank is a financial intermediary that is licensed to accept deposits from the public and create credit products for borrowers. Banks are highly regulated by governments, due to the role they play in economic stability.

Detailed explanation-5: -A mutual fund is a pool of money managed by an investment company that gathers money from individual investors and purchases a range of financial assets.