Financial intermediation
What Financial intermediation means in Economics B A-Level, as defined for Pearson Edexcel.
Definitions of Financial intermediation
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Reference: Pearson Edexcel
The process by which the financial sector collects savings and provides loans, ensuring idle funds are allocated efficiently to productive uses.
The process by which banks pool accumulated savings and lend them out as loans to businesses and individuals requiring capital for investment.
Financial institutions act as intermediaries, channelling funds from savers to borrowers.
Topics that use Financial intermediation
- Role of banks in the economy (Pearson Edexcel A-Level)
- The role of the financial sector (Pearson Edexcel A-Level)
Related terms
- Business investment
- Capital allocation
- Collateral
- Consumer spending
- Credit provision
- Credit rating agencies
- Economic growth
- Interest rates
Using Financial intermediation in the exam
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