1. What is Financial Intermediary?

Answer :
A financial intermediary is a Financial institution is a business entity that collects assets in
the form of funds from the public and is channeled for the needs of development projects and
economic activities by obtaining yields in the form of interest at a certain percentage of the
funds channeled. And financial intermediary is a entity that acts as the middleman between
two parties in a financial transaction, such as a commercial bank, investment banks, mutual
funds and pension funds. Financial intermediaries offer a number of benefits to the average
consumer, including safety, liquidity, and economies of scale involved in commercial
banking, investment banking and asset management. Although in certain areas, such as
investing, advances in technology threaten to eliminate the financial intermediary,
disintermediation is much less of a threat in other areas of finance, including banking and
insurance.
2. What are the functions of Financial Intermediary?
Answer :
Functions of Financial intermediaries is an move funds from parties with excess
capital to parties needing funds. The process creates efficient markets and lowers
the cost of conducting business. For example, a financial advisor connects with
clients through purchasing insurance, stocks, bonds, real estate, and other assets.
Banks connect borrowers and lenders by providing capital from other financial
institutions and from the Federal Reserve. Insurance companies collect premiums for
policies and provide policy benefits. A pension fund collects funds on behalf of
members and distributes payments to pensioners.

And then Basically, a bank is a place for storing, distributing and integrating
payments. The following are some functions of bank financial institutions.

A.) A place for saving money

The bank has a function as a place to save or deposit money.

B.) As a Buyer or Distributor of Credit

The bank also functions as a buyer and distributor of credit. The bank will utilize the
funds deposited by customers by channeling it to other parties who need credit.

C.) Print money

Another function of banks is printing money used in daily economic activities. Of

course, the money printed in a legitimate form of money in rupiah. For the record, the
responsibility for printing money is the responsibility of the central bank.

D.) Collecting Funds

Non-bank financial institutions work by collecting funds from customers by issuing
securities. This method is effective because the safekeeping of funds in the form of
non-money is safer and more efficient.

E.) Giving Credit

LKBB can provide credit in the short or long term. Credit is indeed included in the
main activities of financial institutions. Usually this credit is needed by business
owners to develop their businesses.

F.) Intermediary for Companies

LKBB can be an intermediary for capital owners, both domestic and foreign, with
companies that need capital. This one LKBB function certainly helps companies that
are in need of capital paid by credit.

3. Why do we need Financial Intermediary?

Answer :
Financial Institutions are needed in the modern economy because of their function
as a mediator between groups of people who are overfunded and those who need
funds.
4. What happens when Financial Intermediary fails?
Answer :
that happens financial intermediaries will go bankrupt, but if losses occur because
the borrower does not pay
if a default occurs due to the borrower, it becomes the full responsibility of the lender
or investor. the bank requires the organizer to submit openly about credit risk or
default. From that risk, investors already know the consequences of being a lender,
including the risk of loss and default.

Therefore, the public is encouraged to fully understand their rights and obligations as
users of bank services, especially before agreeing to a loan agreement as an
investor.