Who benefits from the process of financial intermediation?

Question

Quizplus · Accepted Answer

Both savers and borrowers benefit from the process of financial intermediation. Savers benefit as they can earn interest on their savings by depositing their money in banks or other financial institutions. Borrowers benefit as they can obtain loans at competitive rates from these same financial institutions. Financial intermediaries facilitate the process by pooling savings and making them available to borrowers who need funds, thus enjoying the economies of scale in the provision of financial services. This process is vital to the efficient allocation of resources in an economy, enabling savers to earn returns on their capital and borrowers to access the funds they need to finance investment and consumption.

Who Benefits from the Process of Financial Intermediation