Indirect finance is where borrowers borrow funds from the
financial market through indirect means, such as through a
financial intermediary. This is different from direct financing where there is a direct connection to the
financial markets as indicated by the borrower issuing securities directly on the
market. Common methods for direct financing include a financial
auction (where price of the security is bid upon) or an
initial public offering (where the
security is sold for a set initial price).