The role of the Financial sector


Finance about safe place for saving and lending. - risks are involved in lending 

risk of lending is spread between different depositors + borrowers

The difference between high interest (borrowing) + low interest (saving) pays for bank services and the cost of carrying the risks involved 

Credit creation is important in helping the economy grow 

The process which banks expand their lending by a multiple of deposits received

Financial intermediaries: organisations channeling funds generated by savers towards borrowers 

Money is a medium of exchange facilitating buying and selling + specialisation + eco…


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