The existence of financial intermediaries greatly increases the efficiency of financial markets because, without them, savers would have to provide funds directly to borrowers, which would be a much costlier process.

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Financial intermediaries, such as banks, mutual funds, and pension funds, collect funds from savers and provide them to borrowers in a more efficient and cost-effective manner. This process reduces transaction costs and improves the allocation of capital in the financial markets. Without financial intermediaries, savers would have to directly interact with borrowers to invest their funds, which would increase transaction costs and limit the availability of funding for borrowers.

The Existence of Financial Intermediaries Greatly Increases the Efficiency of Financial