ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The most common and most frequently average people used financial intermediary is the bank. The bank is the entity that accepts deposits and lends loans to the customers and along with these activities the banks provides other services to their customers.

Detailed explanation-2: -Thus, banks act as financial intermediaries-they bring savers and borrowers together. An intermediary is one who stands between two other parties. 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.

Detailed explanation-3: -Banks: Commercial and central banks serve as financial intermediaries by facilitating borrowing and lending on a widespread scale. Credit unions and building societies also work in the same way, but on a cooperative basis.

Detailed explanation-4: -Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money). The amount banks pay for deposits and the income they receive on their loans are both called interest.

Detailed explanation-5: -What are the examples of financial intermediaries? Some of the examples are commercial banks, stock exchanges, mutual fund companies, insurance companies, credit unions, non-banking finance companies (NBFCs), pension funds, building societies, financial advisors, investment bankers, escrow companies.