Describe the nature of the financial system in modern economy giving t

Question

Describe the nature of the financial system in modern economy giving the important types of constituent institutions, markets and instruments. Explain the concept of flow- of-funds in the financial markets.

29 Aug 2022

Answer :

Word Count : 669

A financial system refers to a system which enables the transfer of money between investors and borrowers. A financial system could be defined at an international, regional or organization level. The term “system” in “Financial System” indicates a group of complex and closely linked institutions, agents, procedures, markets, transactions, claims and liabilities within a economy.

Five Basic Components of Financial System

Financial Institutions
Financial Markets
Financial Instruments (Assets or Securities)
Financial Services
Money
Financial Institutions

Financial institutions facilitate smooth working of the financial system by making investors and borrowers meet. They mobilize the savings of investors either directly or indirectly via financial markets, by making use of different financial instruments as well _________ ______ __________ ______ _____.
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