A type of risk redistribution (financial transformation) whereby small amounts from saver-lenders (surplus units) are aggregated into large amounts in order to meet the needs of borrower-spenders (deficit units) for financing.
Size transformation is carried out by banks and other deposit-taking financial institutions whereby small deposits by different types of depositors are pooled in order to issue large loans to seekers of funds. For example, 5000 small deposits with the bank to the tune of €1000 each, will allow the bank to provide a sizable loan of €5000,000 to a company seeking to finance acquirement of machinery equipment.
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