Bank Management & Financial Services 9th Edition by Peter Rose solution manual

Convergence is the bringing together of firms from different industries to create conglomerate firms offering multiple services. Clearly, these two trends are related. In their effort to compete with each other, banks and their closest competitors have acquired other firms in their industry as well as across industries to provide multiple financial services in multiple markets.
 
1-6.   What is a financial intermediary? What are its key characteristics? Is a bank a type of financial intermediary? What other financial-services companies are financial intermediaries? What important roles within the financial system do financial intermediaries play?
 
A financial intermediary is a business that interacts with deficit spending individuals and institutions and surplus spending individuals and institutions. For this reason, any financial service provider (including banks) is considered a financial intermediary. Banks, along with insurance companies, mutual funds, finance companies, and similar financial-service providers are financial intermediaries. In their function as intermediaries they act as a bridge between the deficit and surplus spending units by offering financial services to the surplus spending individuals and then allocating those funds to the deficit spending individuals. Financial intermediaries accelerate economic growth by expanding the available pool of savings, lowering the risk of investments through diversification, increasing the productivity of savings    and investments, satisfying the need for liquidity, and evaluation of financial information.