1-12 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

Quizplus · Accepted Answer

An FI operating as an intermediary can reduce transaction costs and information asymmetry, leading to more efficient allocation of capital between savers and borrowers. This results in economies of scale, as the FI can handle a large volume of transactions at a lower cost per unit compared to savers or borrowers acting individually.

1-12 an FI Acting as an Agent in Matching Savers