3 mins read
Financial intermediation refers to the channeling of funds from those who have money (the lender) to those that do not have sufficient money to carry out a desired activitiy (the borrower). Collateral plays a very important role in this process. In this post we will look at the benefits of collateral to the lender and borrower and how it promotes and enhances the financial intermediation process. We also consider the situations where collateral is not easily available and the resultant impact on the financial intermediation process and the economy as a whole.