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In this case they help at lower costs channel funds from lenders to borrowers. For example, if a person has a need for some funds the intermediary will find the lender to borrow the funds. Another function they perform is lowering the lending risk. Here they screen the borrowers. They also guarantee deposit safety to an amount limited. Resources do not have to be spent in order to determine the profitability of each borrower's reputation to be a potential lender (Brazosport College, 2003, November 14). One more function they perform is diversifying the risks that are involved. They can do this by pooling deposits together so that not just a single depositor is lending to a single borrower...
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