The concept of financial intermediation

Financial intermediary is a person or institution that plays the role of a medium or bridge between the supply and demand of funds in the process of financing in the financial market. John G. Greeley and Edward S. Shaw (Edward S. Shaw) divided financial intermediaries into two broad categories: the monetary system and non-monetary intermediaries.

The monetary system acts as an intermediary mechanism for the purchase of primary securities and the creation of money; non-monetary intermediaries perform only the intermediary role of purchasing primary securities and creating monetary claims on themselves, which take the form of savings deposits, shares, common stock and other bonds.