How financial intermediaries reduce transaction costs?

Answer 1

Banking firm

can be assimilated as a

centralization of

supply and demand

liquidity

from different

economic agents,

which represents a

source

of

economies of scale

to avoid

duplication of

costs.

Achieving

economies of scale

thus implies

a decrease in

the unit cost of

financial services

as a result of

increased activity

underlying

the bank

and especially

the volume of

transaction. Also banks, as an intermediaries, can has a long terme relations ship with a borrowers , which can contribute to collecte intensive information about this borrower and hence, to reduce the information cost's supported bye the lender (deposits). AN