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... (more then 15 years) borrowers and lenders funds. Financial institutions can be looked at as large profit maximising firms that borrow funds from lenders and lend them to borrowers. They mainly gain profits from charging interest to borrowers at a rate that exceeds that paid to lenders. Theses profits are gained for the shareholders. Apart from creating 'loans' what else do financial institutions do? Well, they act as intermediaries, the middleman or go between for two parties. The parties being lenders and borrowers, or surplus and deficit units. The intermediaries keep a record of people with money top lend and people who wish to borrow. The firm would try and find a potential lender whose desires match that of a potential borrower, it would then charge a commission for introduction them. This is the broking stage. Intermediaries provide something else: *1 "To create assets for savers and liabilities for borrowers ...