What are the roles of financial intermediaries and the risks they face when operating in the financial markets

Question

What are the roles of financial intermediaries and the risks they face when operating in the financial markets?

Answer 1

Depends on whom you ask. To a macro economist, the role of financial intermediaries is to facilitate the flow of savings into investment. To an institutionalist, the role of financial intermediaries is to aggregate (intermediaries aggregate many small accounts into large investments). To a financial economist, the role of financial intermediaries is to reconcile conflicting liquidity and duration preferences (the same people who want to take out 30-year mortgages want checking privileges on their bank accounts).