Financial intermediation

Financial intermediation is the process by which resources are allocated from those individuals who wish to save some of their income for future consumption to those individuals and firms who wish to borrow to buy investment goods for future production.

Definition

According to Macroeconomics by Mankiw (7th edition),

Financial intermediation. The process by which resources are allocated from those individuals who wish to save some of their income for future consumption to those individuals and firms who wish to borrow to buy investment goods for future production.