Question

Banks and other financial institutions of an economy are in the business of channeling funds from suppliers of financial capital to users of financial capital. This process is known as _________.

Answer 1

Financial intermediation

Step-by-step explanation:

The feature described is referred to as financial intermediation. These banks and financial institutions borrow money from lenders and lend to the companies that need capital for investment. By doing these, they provide safety in accessing money and spread the risks. It is basically channelling savings to investments by intermediary institutions which include insurance companies, credit unions and pension funds.