Support or refute the statement: Life insurance companies and commercial banks transfer money from savers to...

Support or refute the statement: Life insurance companies and commercial banks transfer money from savers to users. (Kindly ask you to answer in one paragraph.)

Expert Solution

Life insurance companies and commercial banks transfer money from savers to users.

We agree with the statement. Insurance companies and commercial banks do act as financial intermediaries and hence help in moving the capital from savers to users. Commercial banks accept deposits, pool them together and use the capital to lend. The borrowers thus get access to these capital as loans. Insurance companies collect insurance premium, pool the capital and again invests in bank, non banking financial companies. They in turn use the capital to lend. Thus, the money moves from savers to users.

jeff jeffy answered 2 years ago

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