Financial Intermediaries

Financial intermediaries are institutions that channelize the savings of investors into investments loans. As institutional source of finance, they act as a link between the savers and till investors which results in institutionalization of personal savings. Their main function is to convert direct financial assets into indirect securities. The indirect securities other to the individual investor better investment alternative then the direct/primary security by pooling which it is created, for example, units of mutual funds. The main consideration underlying the an activeness of indirect securities is that the pooling of funds by the financial intermediary leads to a number of benefits to the investors. The services/benefits that tailor indirect financial assets to the requirements of the investors are (i) convenience, (ii) lower risk. (iii) expert management and (iv) lower cost.

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