Financial intermediation?

Financial intermediation refers to the process by which financial institutions such as banks, credit unions, and investment firms facilitate the flow of funds between savers and borrowers. These intermediaries collect funds from savers and then lend or invest those funds with borrowers or companies in need of capital. By acting as intermediaries, these financial institutions help to allocate capital efficiently and reduce the risk for both savers and borrowers. This process plays a crucial role in the functioning of the financial system and the overall economy.