Financial intermediaries serve as middlemen for financial transactions, generally between banks or funds. These intermediaries help create efficient markets and lower the cost of doing business. Intermediaries can provide leasing or factoring services, but do not accept deposits from the public.

What does a financial intermediary do?

Financial intermediaries provide a middle ground between two parties in any financial transaction. A prime example would be a bank, which serves many different roles: it acts as a middleman between a borrower and a lender, and pools together funds for investment.

What is the most important financial intermediary?

1. Banks. Undoubtedly, banks are the most popular financial intermediaries in the world. They come in multiple specialties that include saving, investing, lending, and many other sub-categories to fit specific criteria.