Which situation reflects the financial role of a bank as a financial intermediary?

The situation that reflects the financial role of a bank as a financial intermediary is one in which the bank borrows funds from savers and then uses those funds to lend to businesses. This process is foundational to the banking system and illustrates a key function of banks within the economy.

Banks serve as financial intermediaries by facilitating the transfer of funds between savers, who are looking for safe places to deposit their money and receive interest, and borrowers, such as businesses, who need capital to grow and operate. By efficiently managing this flow of funds, banks assess credit risks, set interest rates, and make lending decisions that drive economic activity.

This role is critical because it enhances liquidity in the financial system, allowing for efficient allocation of resources where they are most needed. It creates a supportive environment for both individual savers, who earn interest on their deposits, and businesses, which can access the capital necessary for expansion and investment. The ability of banks to act as intermediaries also helps to mitigate risks through diversification and professional management of the funds they handle.

In contrast, the other options do not accurately represent the core function of banks as intermediaries. Issuing stocks relates to capital raising rather than intermediation, managing public sector funds is a narrow focus