MANAGEMENT

Detailed explanation-1: -A bank is a financial intermediary that is licensed to accept deposits from the public and create credit products for borrowers.

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: -Borrowers and Savers There are two main roles in the financial intermediation process: borrowers, also known as spenders and savers, also called lenders. Let’s look at borrowers first. Borrowers need money for various reasons: to purchase a home, start a business, pay for business expenses and fund programs.

Detailed explanation-4: -On one hand, the primary role of financial institutions-units in the system is to intermediate between those that provide funds and those that need the funds, typically transforming and managing risk.

Detailed explanation-5: -The three main roles of financial intermediaries include asset storage, loans, and investments. The main disadvantages of financial intermediaries include lower investment returns, mismatched goals, credit risk, and market risk.