The process of financial intermediation

The process of financial intermediation is depicted here; the different types of financial intermediaries- depository and non-depository financial institution, Note that ultimate lenders and Ultimate borrowers are the same economic units- households, business, and government –but not necessarily the same individuals. Whereas individual households can be net lenders or borrowers, households as an economic unit are net lenders. Specific businesses or government, similarly, can be net lenders or borrowers; both, as economic units, are net borrowers.