Fnancial intermediation refers to in the process of financing in the financial markets, in the media or bridge between capital supply and demand is the function of people or institutions. John▪G▪gayle and forced the Edward▪S▪forced the shaw (Edward S.S haw) the financial intermediary is divided into two categories: Monetary System and the Monetary System of Intermediary agencies.
▶ Monetary system as the mediation mechanism, buy primary securities and money creation;

▷ Non-monetary only fulfill purchase primary securities intermediary institutions and the creation of its own currency bonds intermediary role, the creditor's rights to savings deposit, stock, common stock and other securities.

   Overview

   Financial intermediaries, financial intermediation by Banks and non-bank financial intermediaries, including commercial Banks, securities companies, insurance companies, and information consulting services such as intermediary institutions, finance is the core of modern economy.In the modern market economy, financial activities and closely related to the economic operation, the scope of financial activities, quality directly affect the performance of economic activities, almost all financial activities are centered in financial intermediaries, as a result, the financial intermediary occupies a very important position in the economic activities.With the deepening of the degree of economic financialization and the rapid advance of economic globalization, the financial intermediary itself become a very complicated system, and the system operating condition for the healthy development of economy and society has very important role.

   Function
1) ACTS as the credit intermediary, promote the financing. The most basic functions, financial intermediary by indirect financing financing between borrowers.

2) ACTS as pay intermediary, convenient payment and settlement. To complete the payments for the customer transfer or liquidation of creditor's rights debt relations formed by the trade, through modern payment system, increase the efficiency of payment.

3) To provide financial services, to reduce transaction costs. Reduces the money supply on both sides of the search and verify the cost supervision and audit, risk management and participate in the cost; Financial intermediaries using special technology at the same time, provide a wide range of services with cheap cost.

4) Solve the problem of asymmetric information, prevent the adverse selection and moral hazard. Information asymmetry is the trade both parties have different information, information asymmetry cause consequences are adverse selection and moral hazard, and financial intermediaries can effectively prevent precisely.
5) Transfer and dispersed financial risk.

   Classification
1) According to the field of activities can be divided into: Direct Financial Intermediaries and Indirect Financial Intermediation.

2) According to the function can be divided into: the Financial Regulation, Regulatory Agencies and Financial Institutions in general.

3) According to business characteristics can be divided into: Banks and Non-bank Financial Institutions.

4) According to the role in financial activities can be divided into: Financing Financial Intermediation, Investment, Insurance, Financial Intermediary Financial Intermediary, Information consulting service class financial intermediation.

5) According to the sources of funding pattern can be divided into: Deposit Financial Institutions, Compact Savings Institutions and Investment Agencies.

   Role

1) Financial intermediation has realized the cash flow and logistics, information flow of effective integration and match

   As is known to all, the birth of the industrial technology has brought the expansion of production scale and improvement of productivity, the product break through the narrow geographical scope, obtain more broad market space, transportation industry arises at the historic moment, the birth and development of transportation industry to expand the area of logistics, improve efficiency.

   Human in building the railway and airline this vast physical network, the first is the problem of insufficient funds, the development of transportation make the product of mass production and sales to become a reality, which in turn promotes to further expand the scale of production, has also encouraged companies to the huge increases in demand for funds, financial markets, the financial intermediary organizations such as Banks, credit and other financial intermediaries tools.Raising capital and risk aversion to lead to a new kind of enterprise organization form, joint-stock, matching of the securities market. The appearance of the capital market and monetary market enterprise scale rapid expansion, shrinkage and transfer possible,Monetary market and capital market as a carrier of the cash flow, the capital flow and configuration in a larger scope, the expansion of production scale and market scope expansion generated the need of information communication, to improve the material flow, capital flow efficiency and reduce the blindness, the premise is the communication of information, information services arises at the historic moment, both belong to the service industry of transportation, finance, and information of their function, realizes the capital, information and material flow matching, guarantee the need of real and virtual economy operation.

    Information revolution caused by the information technology innovation and diffusion, the development and integration, not only for the economic development of human society provides new ways and new technology paradigm, and problems in the process of information transmission and commodity trading, promoted from the financial intermediary market, financial intermediaries and financial intermediary media such as comprehensive innovation,The development of derivative financial tools to meet the real and the virtual economy multiple needs of the investment and avoid risk, and cash flow automation has become a reality, the development of financial intermediaries that cash flow is not only highly accord with the requirement of the logistics, information flow, but also need to promote and strengthen the development of the real economy, it is "c" efficient integration with matching, make social resource in the most effective and efficient way to consolidate and configuration, and thus social economy enters a new pattern of development.

2) Financial intermediaries make resource allocation efficiency

   First of all, it is the existence of various financial medium, led to the capital to create a system of production, makes the monetary capital import industry of capital circulation, meet the needs of economic growth of funds, financial intermediation through own activity plays an incremental increase in the whole national economy and the function of the stock adjustment, financial intermediation in the construction and activation of financial markets at the same time, thus activating the whole social economy.

   Second, the financial intermediary it form the value of wealth and power spun off from the various physical shape, stamps into virtual financial assets, so that social wealth can flow easily in the form of symbols, the allocation of resources for the possibility of a limitless range, configuration efficiency has been greatly improved, the allocation of resources into the efficiency of the whole society.

3) Financial intermediary function of transaction cost saving

   System evolution is a process of constantly to save transaction cost, the existence of the intermediate medium is a key link in the process of transaction cost saving.

   Human economic development is an ongoing technological and institutional innovation to reduce production cost and transaction cost, so as to improve the efficiency of economic operation of history, the first is the emergence of fairs, widening the choice of trade, improve the sell-through rate under the condition of the given transaction cost, it not only reduces the cost on the road of time cost, and to a certain extent, reduces the chance and waiting time of transaction costs, thus greatly reduces the unit commodity transaction costs, followed by the birth of monetary shortens the transaction of the intermediate links, making exchange becomes more smooth, saving the cost of the clearing house need to search and wait.
   Businessman is just the beginning of trading professional activity, with the development of productivity, trading technology innovation, the division of labor between businessmen: wholesalers, traders, retailers and so on, every professional has brought lower transaction costs and transaction scope expanding, while making covering the scope of the market system is more and more big, the specialized organization, the business enterprise in the trade, the result is further reduce the transaction costs, trading range of further stimulated the expansion of enterprise scale and improvement of enterprise production ability, enterprise demand for capital increase, the factors of capital market.
   The expansion of enterprise scale, money is a key role, money market intermediary organization, the bank was born, and brought the money market transaction efficiency and reduced transaction costs, but bank indirect financing scale is limited, short time limit, such as simple operation of the money market is difficult to meet the needs of enterprise development,The need of raising capital and risk aversion led to the birth of a new form of enterprise organization, joint-stock, matching of the securities market, the appearance of the capital market and monetary market enterprise scale rapid expansion, shrinkage and transfer, as a carrier of the capital flow, money market and capital market, the capital flow and configuration in a larger scope, greatly improving the efficiency of capital market transactions, reduce the transaction costs in the capital markets.
   Today the virtualization level of the national economy is more and more high, the transaction costs of financial intermediation development and reduce has much to do.

4) Financial intermediaries development to promote the rational development of enterprise organization
   First of all, the existence of various financial medium for the resource adjustment provides conditions, make the merger between enterprises, including vertical integration, horizontal mergers and mixed mergers can become feasible due to cost down, the new configuration can not only realize the inventory of production factors, and can realize the rapid expansion of economic scale and promote enterprise scale structure rationalization, in addition, the financial intermediary also promoted the adapted to social productivity of the formation and development of enterprise organization structure, such as the holding company of multistage holding, lead to the emergence of enterprise group.
   Second, the financial intermediary to screening of business operators, the mechanism of socialization in commodity economy, the era of usury, business operators generally is the direct owner of enterprise, in this case, the business operators for social function basically no, currency bank after the creation of financial mechanism, society began to strengthen to the screening of the enterprise operator function, namely the lack of expertise and management experience of the people generally difficult to obtain bank loans, securities, securities market, investment Banks, and other new type of financial intermediary activities, to the supervision mechanism of the enterprise operator from a single bank system expands to all aspects of society, improve the enterprise operational mechanism to obtain the enterprise behavior and decision making is more reasonable.