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2. (a) Explain how banks are able to act as intermediaries by reconciling conflicting requirements of lenders and borrowers and reducing costs. (12 marks) (b)

2. (a) Explain how banks are able to act as intermediaries by reconciling conflicting requirements of lenders and borrowers and reducing costs. (12 marks) (b) Explain the Diamond theory of delegated monitoring and discuss its contribution to our understanding of financial intermediation.(13 marks)

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