What important role do the financial intermediaries play in an economy?

What important role do the financial intermediaries play in an economy? 

Ans. Financial intermediaries play a significant role in an economy. Gurley and Shaw and many subsequent authors have stressed the role of transaction costs. They reduce transaction costs and search cost. Moreover, fixed cost of asset evaluation can be reduced by sharing among intermediaries. They facilitate transfer of risk from risk averse to risk loving investors. They simplify dealing in securities market which would have been difficult in the absence of financial intermediaries. Trading costs imply that intermediaries can be easily diversified than individuals.