It can adjust the term structure, thus minimizing the possibility of liquidity crisis. From the perspective of borrowing, an intermediary with a large number of depositors can normally predict the repayment demand. Due to the importance of economies of scale, the assets and liabilities of financial intermediaries are highly specialized, which improves their competitiveness and helps to increase their chances of survival. Information economics and transaction cost theorists believe that the existence of uncertainty and transaction cost leads to the emergence of financial intermediaries, and makes financial intermediaries have multiple functions of reducing transaction costs and eliminating uncertainty and its risks.
Hans Weikander believes that the cause of financial intermediation is the result of two kinds of information asymmetry and expensive information products.
The first information asymmetry is that entrepreneurs have information advantages over other investors, and other investors need to spend some resources to obtain information.
Another kind of asymmetric information is about the realized profits of investment projects. Entrepreneurs can easily understand the profits of investment projects, while other investors need to spend some time and money. He believes that expensive information products are typical cases of market failure. When the investment level related to economic development greatly exceeds the savings of any investor, market failure is manifested as repeated production of information or no investment.
Obviously, it is a waste to produce information repeatedly, because when individuals produce information, it presents the characteristics of public wealth. Information production is technically professional, which makes some individuals become agents of other investors. They produce information and get paid. There are inherent problems with this arrangement. Agents become financial intermediaries, how can investors ensure that their information transfer agents do their best? This problem will be solved. This diversified financial intermediary can raise funds from public investors. Under this contract structure, the remuneration of financial intermediaries depends on the accuracy of information production, thus solving the above moral problems. Therefore, Hans WeiKant believes that due to the incompleteness of the capital market and asymmetric information, spontaneous financial intermediation is produced by saving the cost of pre-project evaluation.
From the above analysis, it can be seen that most of the previous studies on financial intermediaries were conducted from a narrow perspective. Financial intermediaries are defined as banks and non-bank financial institutions, and the research scope of financial intermediaries is mainly limited to financial institutions. With the development of the financial industry and the improvement of the virtualization of the whole social economy, it is difficult to accurately explain the functions and functions of financial intermediaries, let alone the development of financial markets and their powerful penetration, promotion and destruction of economic life. It is difficult to understand the virtualization of economic life and its development.