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# Bank Financial Intermediation Efficiency

## Definition

The effectiveness with which banks channel funds from savers to borrowers while minimising costs and risks. High efficiency in financial intermediation enhances economic development and productivity.

## Source Chapter

Book II, Chapter 2

## Context

Smith analyses how efficient financial intermediation by banks enhances economic development, showing how reducing intermediation costs can significantly improve capital allocation and economic productivity.

## Economic Domain

Accumulation

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