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Chapter 17: Q.19 (page 426)

Why are banks called 鈥渇inancial intermediaries鈥�?

Short Answer

Expert verified

Banks are alluded to be monetary intermediates since they go about as a connection among savers and borrowers.

Step by step solution

01

Step 1. Concept of financial intermediaries

An institution or individual acting as a middleman among diverse parties to facilitate financial transactions.

02

Explanation

Monetary go-betweens are the people who work with the directing of assets among moneylenders and borrowers. Bank likewise acknowledges the reserve funds from public, pay them loan cost. The people who needs to get advance they get it from bank and they pay loan cost to bank. Thus bank is helping in circling the cash in economy and cooking the necessities of individuals also.

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