indirect financing refers to the process of obtaining funds through intermediaries, such as banks or financial institutions. Instead of directly borrowing from lenders, individuals or businesses go through these intermediaries to access capital. Banks, for example, collect deposits from savers and lend the money to borrowers, earning interest in the process. This method provides several advantages: it offers convenience, as intermediaries handle the complexities of lending; it enhances security, as regulated institutions oversee transactions; and it often provides more flexible terms compared to direct borrowing. However, there are also drawbacks, like potentially higher costs due to intermediary fees and less control over the lending process. Overall, indirect financing plays a crucial role in modern economies, facilitating the flow of funds between savers and borrowers. 💸💼

finance economy indirectfinancing