Financial intermediation supports economic growth and development by bringing together numerous savers and investors in growing and increasingly complex markets.

Question

Quizplus · Accepted Answer

Financial intermediation plays a crucial role in fostering economic growth and development by facilitating the flow of funds from savers to borrowers and channeling these funds into productive investment opportunities. Through the intermediary function of banks, capital markets, and other financial institutions, savers can diversify their investments, earn a return on their savings, and contribute to the funding of new businesses, infrastructure projects, and other productive endeavors that drive economic activity and create jobs. This intermediation process also helps to mitigate risk, reduce transaction costs, and improve the efficiency and transparency of financial markets, thereby promoting greater financial stability and sustainability over the long run.

Financial Intermediation Supports Economic Growth and Development by Bringing Together