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Institutions that serve as go-betweens by borrowing from people who have saved to make loans to others are known as?

A) Commercial banks
B) Investment banks
C) Savings and loan associations
D) Intermediaries

User Frakod
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1 Answer

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Final answer:

Institutions that serve as go-betweens by borrowing from people who have saved to make loans to others are known as A) Commercial banks, as they are a primary type of financial intermediary that facilitate the flow of money between savers and borrowers.

Step-by-step explanation:

Institutions that operate as a middleman between individuals or entities seeking to save money and those intending to borrow are known as financial intermediaries. One of the principal examples of such institutions are commercial banks. These banks accept deposits from savers, who receive interest on their savings.

Then, banks lend these funds to borrowers, who repay the loans with interest. This process is pivotal in facilitating the flow of money within the economy. In this scenario, since commercial banks accept deposits and offer loans, they are described by option A) Commercial Banks.

Other types of financial intermediaries such as investment banks, savings and loan associations, insurance companies, and pension funds also connect savers and borrowers but are not typically depository institutions.

User Olaf Kock
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