Editing Financial intermediary (section)

==Advantages and disadvantages of financial intermediaries==

There are two essential advantages from using financial intermediaries:
# Cost advantage over direct lending/borrowing {{Citation needed|reason=no sources given whatsoever|date=January 2011}}
# [[Market failure]] protection; The conflicting needs of lenders and borrowers are reconciled, preventing{{Citation needed|reason=this is a major claim|date=January 2011}} market failure

The '''cost advantages''' of using financial intermediaries include:
#Reconciling conflicting preferences of lenders and borrowers
#Risk aversion intermediaries help spread out and decrease the risks
#[[Economies of scale]] - using financial intermediaries reduces the costs of lending and borrowing 
#[[Economies of scope]] - intermediaries concentrate on the demands of the lenders and borrowers and are able to enhance their products and services (use same inputs to produce different outputs)

Various disadvantages have also been noted in the context of [[Climate Finance|climate finance]] and [[development finance institution]]s.<ref name="Financial Intermediaries"/> These include a lack of transparency, inadequate attention to social and environmental concerns, and a failure to link directly to proven developmental impacts.<ref>Bretton Woods Project (2010)"[http://www.brettonwoodsproject.org/art-567190 Out of sight, out of mind? IFC investment through banks, private equity firms and other financial intermediaries]", Bretton Woods Project, London</ref>