Theories regarding financial intermediation and financial intermediaries – a survey

Abstract

In this paper we propose to make a presentation of the m ain theories on financial intermediation and financial intermediaries. Modern theory of financial intermediation examines the main functions of financial intermediation, how the financial intermediation affects the economy as a whole and the effects of government policies on financial intermediaries. We will focus on issues of function of financial intermediaries, such as reduction of transaction costs, liquidity provision, information provision, debt renegotiation.