Financial intermediaries.

Financial intermidiares included commercial banks and other finance companies that channel the money from surplus units to deficit units. Surplus units are wealthy people, corporations or central banks that have abundant money to invest or deposit into the bank. On the other hand, the intermediaries lend the money to the deficit units such as people or corporations who needs cash. Therefore, banks bear the risks of default when they lend money to the deficit units. However, as they lend the money to large pool of people, they can diversify the credit risk. On top of that, the financial intermediaries also act as underwriter in helping companies to issue stocks and giving them advice. They will get advisory and underwriter fees from offering those services.