"Impact of Financial Intermediation and Financial Sector Efficiency on Economic Growth in Pakistan "

Abstract

INTRODUCTION Adiqa Kiani1 Muhammad Ali2 1 & 2 Federal Urdu University Islamabad. Email: adiqakian@gmail.com, The primary duty of financial system of a country is to transfer excess money stocks from savers to the borrowers (investor/spenders) for making goods and services and also investment rises by purchasing new tools or equipment and other amenities that causes growth of the economy and also living standard of people gets better, So financial system is most important concept of the modern society (Vincent, 2013). The financial sector has two types of financing. The two types of financing are direct financing which refers to financial markets and indirect financing which refers to financial intermediaries, play an important role in boosting the economy. Financial intermediary reduces costs associated with saving and investment decisions while financial markets help to cause the full distribution of existing wealth that stimulate economic augmentation of a country (Saqib, 2013). A financial intermediary acts as an agent between parties for channeling financial transactions. The funds are given by the financial institutions often take a form either loans or mortgages. It is called a financial dis-intermediation if the transactions take place between parties directly, e. g debt or equity markets. Financial advisor, banks, life insurance companies, investment banks, credit unions, mutual funds, brokers and stock exchanges are the best examples of financial intermediaries.