Financial Intermediaries Paper - FIN 324

In its broadest sense, the term "intermediary" includes any person who serves to bring other persons together. In the world of corporate finance, a financial intermediary is an institution that acts as a middleman between savers and borrowers. Specifically, these institutions accumulate money from investors and lend it to borrowers. A person with extra money could seek out borrowers alone and bypass intermediaries altogether (Schenk). By removing the middleman, the saver would most likely receive a higher return. So why then, do so many savers and borrowers use intermediaries? This pa…