<Dd> Converting short - term liabilities to long term assets (banks deal with large number of lenders and borrowers, and reconcile their conflicting needs) </Dd> <Li> Risk transformation <Dl> <Dd> Converting risky investments into relatively risk - free ones . (lending to multiple borrowers to reduce the risk) </Dd> </Dl> </Li> <Dl> <Dd> Converting risky investments into relatively risk - free ones . (lending to multiple borrowers to reduce the risk) </Dd> </Dl> <Dd> Converting risky investments into relatively risk - free ones . (lending to multiple borrowers to reduce the risk) </Dd>

Why do financial intermediaries aid in the efficient operation of the economy