What is the central role of financial intermediaries in a market economy?

Question

Quizplus · Accepted Answer

Financial intermediaries, such as banks, credit unions, and investment companies, bring together savers and borrowers by accepting deposits from savers and then lending those funds to borrowers. This process helps to allocate capital efficiently in the economy by enabling those with surplus funds (savers) to earn a return on their savings and those in need of funds (borrowers) to access the capital necessary to invest in business, real estate, or other ventures. Financial intermediaries play a crucial role in facilitating economic growth and development.

What Is the Central Role of Financial Intermediaries in a Market