Introduction to Financial System

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INTRODUCTION TO FINANCIAL SYSTEM
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TABLE OF CONTENTS
1 2 3 4
Introduction
Components of Financial System Importance of
Financial System Conclusion
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INTRODUCTION
A Financial System is a collection or network of
different financial institutions that allows
funds exchange between financial markets.
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DEFINITIONS BY AUTHORS
Prasanna Chandra The financial system consisting
of a variety of institution, markets, and the
instruments which are related in a systematic
manner and provide the principal means by which
savings are transformed into instruments. Amctheb
logger "Financial system is the set of
interrelated and interconnected components
consisting financial institutions, markets and
securities."
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COMPONENTS OF FINANCIAL SYSTEM Financial
Markets Financial Institutions Financial
Instruments Financial Services Money
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Financial Markets
Financial Markets is the place for the exchange
of financial assets where buying and selling is
of the same is involved. It is classified into
two parts i.e, money market (deals in short
term) and Capital Market (long-term financial
assets) Financial Institutions The corporation
which deals with monetary and financial matters
are Financial Institutions. These are the link
between borrowers and investors.
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Financial Instruments
Financial Instruments are the securities and
financial assets. It is a type of contract that
carries monetary value between individuals or
parties. Financial Services These are the
services that are provided by the Financial
Industry. It is provided by the liability and
asset management companies for a smooth
financial system.
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Money
Anything that is used for payment of goods or
services that has been purchased from seller or
repayment of debt, it is termed as Money. It is
an exchange medium for any transaction process.
It is one of the most important component of
Financial System without which no exchange is
possible.
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IMPORTANCE OF FINANCIAL SYSTEM
Providing Payment Channel Connects Borrower and
savers Improve Volatility Stimulate Capital
Evolution Risk Issuance Development of Employment
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Providing Payment Channel
Financial System provides different payment
modes that are convenient to the buyers and
sellers to do financial transactions. Connects
Borrower and savers Financial System plays an
important role in bringing borrowers and savers
together. It allows merging funds from one to
another person.
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Improve Volatility
Financial System helps to enhance the overall
Volatility or liquidity in the market. It
facilitates even flow of funds in
market. Stimulate Capital Evolution Financial
System hasten up the capital formation rate of
the country. It supports the capital evolution.
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Risk Issuance
One of the most salient feature of Financial
System is Risk Diversification. It enable the
allocation of funds so the risk is
minimized. Development of Employment Financial
System is capable of generating employment
opportunities for the people by funding
organizations and businesses.
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CONCLUSION

• As we have learnt the importance and components
  of Financial System, one thing that we need to
  understand is that Financial System is the most
  crucial branch for every country.

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