Financial intermediary

A financial intermediary is an institution or individual that serves as a "middleman" among diverse parties in order to facilitate financial transactions. Common types include commercial banks, investment banks, stockbrokers, insurance and pension funds, pooled investment funds, leasing companies, and stock exchanges.

The financial intermediary thus facilitates the indirect channeling of funds between, generically, lenders and borrowers.[1] That is, savers (lenders) give funds to an intermediary institution (such as a bank), and that institution gives those funds to spenders (borrowers). When the money is lent directly - via the financial markets - eliminating the financial intermediary, this is known as financial disintermediation.

  1. ^ Global Shadow Banking Monitoring Report 2013 (PDF). Financial Stability Board. 2013. p. 12. ISBN 978-0-07-087158-8.

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