An FI acting as an agent in matching savers and borrowers of funds can attain economies of scale and provide this service more efficiently than either the saver or borrower could on their own.

Question

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An FI can use its expertise, technology, and network to efficiently match savers and borrowers, reducing the transaction costs and information asymmetry for both parties. As a result, the FI can achieve economies of scale and scope, which enable it to lower the cost of intermediation and offer competitive rates to both savers and borrowers. This, in turn, can attract more customers and increase the FI's profitability and market share.

An FI Acting as an Agent in Matching Savers and Borrowers