Without financial intermediaries the cost of funds would be about the same as with financial intermediaries.

Question

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Financial intermediaries (such as banks, investment firms, and credit unions) play a crucial role in the economy by connecting borrowers and lenders and facilitating the flow of funds. These intermediaries help to reduce the cost of funds by pooling small and scattered savings into larger and more diversified portfolios, thus reducing the risks and increasing the returns. Without financial intermediaries, borrowers and lenders would have to find each other and negotiate the terms of the loan, which can be a costly and time-consuming process. Therefore, the cost of funds would likely be higher without financial intermediaries.

Without Financial Intermediaries the Cost of Funds Would Be About