ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A lender is a financial institution that lends money to a corporate or an individual borrower with the expectation that the money will be repaid at a later date. Lenders require borrowers to pay interest on the amount borrowed, usually charged at a specific percentage of the total amount of loan.

Detailed explanation-2: -The two major types of financial institutions are depository institutions (those that accept checking and similar accounts) and non-depository institutions.

Detailed explanation-3: -Yes, banks function as intermediaries connecting lenders and borrowers. They primarily collect funds from customers who want to deposit their surplus income and provide them with a return in the form of interest on the deposits.

Detailed explanation-4: -The financial system matches savers and borrowers through two channels: Banks and other financial intermediaries.