A firm whose main function is to borrow money from one set of people and lend it to another. Financial intermediaries are able to operate profitably because of the economies of scale in collecting savings from many sources and making them available for large loans, and in handling information about large numbers of small debtors or the risks of lending to single large ones. Firms wishing to borrow large amounts do not want the trouble of negotiating with numerous small lenders, and lenders can use financial intermediaries to get a spread of risks in their lending without the high transaction costs of making numerous single small loans to the ultimate users of their money. The use of financial intermediaries reduces risk and transaction costs for both lenders and borrowers.