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Indirect finance is crucial because it facilitates the efficient allocation of resources by connecting savers and borrowers through financial intermediaries, such as banks. These intermediaries assess credit risk, provide liquidity, and offer diversification, making it easier for individuals and businesses to access funds. Additionally, indirect finance helps stabilize the financial system by spreading risk and enhancing the overall efficiency of the economy. This process ultimately supports economic growth and development by ensuring that capital is directed to its most productive uses.

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5mo ago

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