3.1k views
0 votes
The means by which lenders and borrowers come together through an intermediary is called

User LP Square
by
7.9k points

1 Answer

2 votes

Final answer:

The process where lenders and borrowers are brought together via an intermediary like a bank, allowing for economic activity without direct interaction, is known as financial intermediation.

Step-by-step explanation:

The means by which lenders and borrowers come together through an intermediary is known as financial intermediation. This process is typically facilitated by institutions like banks, which operate as financial intermediaries. A bank collects funds from savers who deposit their money, offers them interest payments, and creates a pool of funds from which loans can be provided to borrowers. The borrowers then repay these loans with interest. The intermediary, in this case a bank, enables the circular flow of economic activity without the savers and borrowers ever having to meet directly.

User Krishna Deepak
by
7.4k points