Economics: Lenders

Introduction In financial systems lenders play a very important part in the flow of funds. Lenders or savers as they are commonly called, can lend their funds in the form of direct finance or indirect finance. Their funds are transported to the borrowers. To properly understand this we must look at diagram A, a diagram of the circular flow of funds in a financial system, on the diagram page. According to the circular flow diagram, …

…fixed deposits. In August 2004 the total deposits were $538,000m and borrowings by intermediaries were $162,927m. August 2004: lending to governments: $17,400m Lending to individuals: $589,200m Lending to businesses: $404,000m Lending and credit Aggregates in August 2003 and 2004 can be seen in the table on the diagrams page. Conclusion Lenders are an invaluable part of a financial system. Through sending their funds to borrowers through financial markets or financial intermediaries, they are crucial to the financial system working.