MANAGEMENT

Detailed explanation-1: -The basic function of financial intermediaries is to move advice from lenders to borrowers and back to lenders. In the lending/borrowing process, a financial intermediary function is to bear the risk that the borrower will not repay. All financial transactions have a buyer and a seller.

Detailed explanation-2: -Financial intermediaries serve as middlemen for financial transactions, generally between banks or funds. These intermediaries help create efficient markets and lower the cost of doing business. Intermediaries can provide leasing or factoring services, but do not accept deposits from the public.

Detailed explanation-3: -The cycle of money is the movement of money from lender to borrower and back again. It is often accomplished through a financial intermediary like a bank. The common objective is to make both the lender and the borrower better off.

Detailed explanation-4: -Although banks do many things, their primary role is to take in funds-called deposits-from those with money, pool them, and lend them to those who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).

Detailed explanation-5: -The degree to which the banks collect the cash and create deposits represents the degree of financial intermediation. Arithmetically, the degree of financial intermediation is given by the money multiplier, or the ratio between deposit money and the monetary base.