FINANCIAL SYSTEM
Finance involves monetary resources and financing is providing needed funds. The financial system enables the exchange of funds between parties, comprising assets, intermediaries, markets, instruments, and services. It serves as a connection between savers and borrowers, operating at various levels and including formal and informal sectors. The system formulates capital, investments, and profits, with universal applicability and diverse components.
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Presentation Transcript
INTRODUCTION In its simple meaning the term finance refers to monetary resources & the term financing refers to the activity of providing required monetary resources to the needy persons and institutions.The term financial system refers to a system that is concerned with the mobilization of the savings of the public and providing of necessary funds to the needy persons and institutions for enabling the production of goods and/or for provision of services. Thus, a financial system can be understood as a system that allows the exchange of funds between lenders, investors, and borrowers. In other words, the system that facilitates the movement of finance from the persons who have surplus funds to the persons who need itis called as financial system. It consists of complex, closely related services, markets, and institutions used to provide an efficient and regular linkage between investors and depositors. Financial systems operate at national, global, and firm- specific levels. It includes the public, private and government spaces and financial instruments which can relate to countless assets and liabilities.
COMPONENTS/CONSTITUENTS/ELEMENTS/ PARTS OF FINANCIAL SYSTEM 1. Financial Assets 2. Financial Intermediaries/Financial Institutions 3. Financial Markets 4. Financial Instruments and 5. Financial Services
FEATURES/CHARACTERISTICS OF FINANCIAL SYSTEM 1.Financial system acts as a bridge between savers and borrowers. 2.It consists of a set of inter-related activities and services. 3. It consists of both formal and informal financial sectors. The existence of both formal and informal system is also called as financial dualism. 4.It formulates capital,investment and profit generation. 5.It is universally applicable at firm level,regional level,national level and international level. 6. It consists of financial institutions, financial markets, financial services, financial instruments, financial practices and financial transactions.
