Financial Intermediaries

Financial intermediaries are common throughout the financial industry. Financial intermediaries will borrow money from people who save money and provide loans to others as an intermediary between the investor and the company that raises the funds. Common institutions for mediation are commercial banks, credit cooperatives, insurance companies, mutual funds and financial companies. These financial institutions are an essential element for the overall health and functioning of the global financial market.

Financial intermediaries provide depositors with two important advantages. The first advantage is that loans through intermediaries are usually at a lower risk than direct financing. The intermediary has the ability to achieve diversity. Financial intermediaries provide a substantial amount of loans / transactions, but some of them are unhealthy, but the majority of losses are balanced with revenue. In Intel and AMD, brokers can "lock up" stakeholders in many "baskets" to minimize the risk of their depositors / stocks / stockholders (Schenk). Financial intermediary organizations are composed of many different financial institutions

Financial intermediaries provide important benefits for depositors. Brokerage loans are usually less risky than direct loans. The main reason for reducing risk is to be able to diversify financial intermediaries. Financial intermediaries provide a large number of loans to various borrowers. When an error occurs, the financial intermediary can compensate for the interest on another's loan. However, if the depositor borrows directly from the company, the risk will be borne by the individual. Another reason is that financial intermediaries focus on loans and better predict who can pay back compared to individual savings.

The role of financial intermediaries in economic development is also the purpose of some research. For example, Honohan (2008) links financial intermediaries to poverty. The main problems faced by people in developing countries are not only the lack of capital resources but also the restrictions on access to financial services, especially banks and savings accounts. For example, if financial inclusion is low, the effectiveness of the redistribution scheme may be compromised (Ravallion and Chen, 2005), as it saves half of additional income and hedges future losses. Financial intermediaries not only directly affect the poor, but also indirectly influence through corporate loans and labor markets. In particular, small and medium-sized enterprises have made a great contribution to the employment of low-developed countries, but since they are often restricted by mobilization of external capital, they contribute little to economic growth. In addition, we need to investigate the role of financial integration