Financial intermediaries are financial institutions

Reference no: EM13691123

Financial intermediaries are financial institutions that intermediate credit — they take money from surplus income units, mix it up, and give it out to deficit spending units. Why would a surplus income unit prefer to give money to a financial intermediary rather than buy claims directly from the deficit spending units in the financial markets? How does intermediation increase liquidity and reduce risk for surplus income units.

Reference no: EM13691123

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