Question: Can you help me to explain this? There are four further reasons for the dominance of intermediation over direct financing : Transaction costs Liquidity insurance

Can you help me to explain this?

There are four further reasons for the dominance of intermediation over direct financing :

  1. Transaction costs
  2. Liquidity insurance
  3. Information-sharing coalitions - (emphasise the merits and benefits arising from a close relationship between the intermediary and its customers)
  4. Delegated monitoring - (Leland and Pyle's (1977) ideas that information is a private good within a bank, thus providing an incentive for the gathering of information)

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