Finantsvahenduste

Finantsvahenduste refers to financial intermediation in Estonian. It is the process by which financial institutions facilitate the flow of funds between savers and borrowers. These intermediaries, such as banks, credit unions, and investment funds, act as a bridge, channeling surplus funds from those who have them to those who need them for investment or consumption.

The primary function of financial intermediation is to reduce the transaction costs and information asymmetry between lenders and borrowers. Savers may not have the time, expertise, or desire to directly identify and assess the creditworthiness of borrowers. Similarly, borrowers might struggle to find suitable lenders. Financial intermediaries specialize in these activities, offering a range of services that include deposit-taking, lending, payment processing, and investment management.

Key benefits of financial intermediation include the efficient allocation of capital within an economy, which supports economic growth. It also provides liquidity, allowing individuals and businesses to access funds when needed, and diversifies risk for both savers and borrowers. The development of sophisticated financial intermediation mechanisms is a hallmark of a developed financial system. Without it, investment and economic activity would be significantly hampered.