The institutions/ agencies that
channel funds from savers (households) to users (Industries) are
called the financial intermediaries, some of its functions
are:-
- Act as middleman/ agent :- The
financial intermediaries take's money from the lenders and provide
loans to the borrowers directly and indirectly. They take certain
amount of the deal as there commission.
- Ensuring safety of the
investments:- The financial intermediaries invest the investors
money in wide range of portfolios and hence suffers less risks.
Eg:- Insuarance Companies, Pension Funds etc.
- Economies of scale:- They take part
in creating the economies of scale by giving loans in large amount
to various industries/ bussinesses, as this institutions are big in
size, having many branches, spends large amount on advertisements,
they find perspective loan takers.