Financial intermediaries perform an important job. What is that job and how do they perform it?

Question

Financial intermediaries perform an important job. What is that job and how do they perform it?

Answer 1

A financial intermediary is typically an institution that facilitates the channeling of funds between lenders and borrowers indirectly. That is, savers (lenders) give funds to an intermediary institution (such as a bank), and that institution gives those funds to spenders (borrowers). This may be in the form of loans or mortgages. Alternatively, they may lend the money directly via the financial markets, which is known as financial disintermediation.