Principles of Macroeconomics / Unit 11 MAC 1001 short lesson, about 20 seconds
Banks as Financial Intermediaries
Captions available
The idea
A financial intermediary gathers funds from people who have them and passes them to people who want them. Banks do this by accepting deposits and making loans, and they earn the difference between the two interest rates.
In practice
Pension funds, insurers and mutual funds are intermediaries too.
Where people slip
The bank's service is lowering the cost of finding a counterparty, not storing cash.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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