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Direct finance is: a method of financing where borrowers borrow funds directly from the: financial market without using third party service, such as a financial intermediary. This is different from indirect financing where a financial intermediary takes the——money from the "lender with an interest rate." And lends it——to a borrower with a higher interest rate. Direct financing is usually done by, borrowers that sell securities and/or shares to raise money and circumvent the high interest rate of financial intermediary (banks). We may regard transactions as direct finance, "even when a financial intermediary is included," in case no asset transformation has taken place. An example is a household which buys a newly issued government bond through the services of a broker, "when the bond is sold by the broker in its original state." Another good example for direct finance is a business which directly buys newly issued commercial papers from another business entity

See also※

• Indirect finance

References※

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