Explain the 3 ways in which surplus funds can be transferred from savers to borrowers. Who tend to be net savers and who tends to be net borrowers?

1. Financial Intermediation: Financial intermediaries are institutions that bridge the gap between savers and borrowers by pooling deposits from savers and using those funds, or taking out loans, to make investments or loans to borrowers. This offers savers the opportunity to be involved in the lending activity without having to enter into a direct contract with a borrower. 2. Direct Lending: Borrowers and savers can also connect directly with one another, via private lenders and borrows, exchange-traded funds, or peer-to-peer financing tools. This direct lending, with the exchange of funds occurring directly between the two parties, is often easily arranged, and can offer the borrower the best possible terms. 3. financial markets: Financial markets, such as stock markets or commodity exchanges, are large, active markets involving hundreds of millions of savers, investors, and borrowers. Through this platform, savers’ funds are moved to borrowers who need those funds to finance their activities. Generally, households, businesses, and governments tend to be net savers and financial institutions tend to be net borrowers.