Abstract:

This paper explores the link between financial intermediation by banks, households and firms. Special attention was paid to the issue of financial intermediaries’ characteristic, financial intermediaries’ role, critical analysis of the changes that had been created leading to the present state of affairs in the financial markets, and to look at the different forms of regulations, to examine why some regulations play an important part in financial intermediation process in Malaysia. There are very few studies conducted in the area of financial intermediation and a new update and further exploration in this area is needed by future researchers. Hence, this paper shows the assessment of all these aspects, which are fully supported by theoretical and current sources of information which is able to provide a balanced conclusion on the role of financial intermediaries in Malaysia.