Financial intermediation

A financial intermediary Qis an institution or Financial intermediation
A financial intermediary is an institution or individual that serves as a middleman among diverse parties in order to facilitate financial transactions. Common types include commercial banks, investment banks, stockbrokers, pooled investment funds, and stock exchanges. Financial intermediaries reallocate otherwise uninvested capital to productive enterprises through a variety of debt, equity, or hybrid stakeholding structure.

Through the process of financial intermediation, certain assets or liabilities are transformed into different assets or liabilities. As such, financial intermediaries channel funds from people who have surplus capital (savers) to those who require liquid funds to carry out a desired activity (investors).

A financial intermediary is typically an institution that facilitates the channeling of funds between lenders and borrowers indirectly. That is, savers (lenders) give funds to an intermediary institution (such as a bank), and that institution gives those funds to spenders (borrowers). This may be in the form of loans or mortgages. Alternatively, they may lend the money directly via the financial markets, and eliminate the financial intermediary, which is known as financial disintermediation.

In the context of climate finance and development, financial intermediaries generally refer to private sector intermediaries, such as banks, private equity, venture capital funds, leasing companies, insurance and pension funds, and micro-credit providers.Increasingly, international financial institutions provide funding via companies in the financial sector, rather than directly financing projects.
There are two essential advantages from using financial intermediaries:

1.Cost advantage over direct lending/borrowing.
2.Market failure protection; The conflicting needs of lenders and borrowers are reconciled,preventing market failure.
Various disadvantages have also been noted in the context of climate finance and development finance institutions.These include a lack of transparency, inadequate attention to social and environmental concerns, and a failure to link directly to proven developmental impacts. that serves as a middleman among diverse parties in order to facilitate financial transactions. Common types include commercial banks, investment banks, stockbrokers, pooled investment funds, and stock exchanges. Financial intermediaries reallocate otherwise uninvested capital to productive enterprises through a variety of debt, equity, or hybrid stakeholding structure.

Through the process of financial intermediation, certain assets or liabilities are transformed into different assets or liabilities. As such, financial intermediaries channel funds from people who have surplus capital (savers) to those who require liquid funds to carry out a desired activity (investors).

A financial intermediary is typically an institution that facilitates the channeling of funds between lenders and borrowers indirectly. That is, savers (lenders) give funds to an intermediary institution (such as a bank), and that institution gives those funds to spenders (borrowers). This may be in the form of loans or mortgages. Alternatively, they may lend the money directly via the financial markets, and eliminate the financial intermediary, which is known as financial disintermediation.

In the context of climate finance and development, financial intermediaries generally refer to private sector intermediaries, such as banks, private equity, venture capital funds, leasing companies, insurance and pension funds, and micro-credit providers.Increasingly, international financial institutions provide funding via companies in the financial sector, rather than directly financing projects.

There are two essential advantages from using financial intermediaries:

1.Cost advantage over direct lending/borrowing.
2.Market failure protection; The conflicting needs of lenders and borrowers are reconciled,preventing market failure.

Various disadvantages have also been noted in the context of climate finance and development finance institutions.These include a lack of transparency, inadequate attention to social and environmental concerns, and a failure to link directly to proven developmental impacts.