What is a financial intermediary

Financial intermediary refers to the person or institution that acts as a medium or bridge between the supply and demand of funds in the process of financing in the financial market. John G. Gurley and Edward S. Shaw divided financial intermediaries into two categories: monetary system and non-monetary intermediaries. The monetary system acts as an intermediary mechanism for buying primary securities and creating money; Non-monetary intermediaries only play an intermediary role, buying primary securities and creating monetary claims against themselves in the form of savings deposits, stocks, common stocks and other bonds.

Financial intermediaries are generally composed of bank financial intermediaries and non-bank financial intermediaries, including commercial banks, securities companies, insurance companies and information consulting services. Finance is the core of modern economy. In modern market economy, financial activities are closely related to economic operation. The scope and quality of financial activities directly affect the performance of economic activities. Almost all financial activities are centered on financial intermediaries, so financial intermediaries occupy a very important position in economic activities. With the deepening of economic financialization and the rapid advancement of economic globalization, financial intermediary itself has become a very complex system, and the operation of this system plays an extremely important role in the healthy development of economy and society.