A 'financial system' is a system that allows the exchange of funds between lenders, investors, and borrowers. Financial systems operate at national and global levels. They consist of complex, closely related services, markets, and institutions intended to provide an efficient and regular linkage between investors and depositors.
As an alternative to bartering, a modern financial systems may include banks, financial markets, financial instruments and financial services.
Features of financial system
It is a set of interrelated activities or services.
Services are working together to achieve predetermined goals.
The system allows transfer of money between savers and borrowers.
It is applicable at global, regional, and firm level.
It includes Financial Institutions, markets, instruments, services, practices and transactions.
The main objective is to formulate capital, investment and profit generation. de financial services for members and clients. It is also termed as financial intermediaries because they act as middlemen between the savers and borrowers
It bridges the gap between savings and investment through efficient mobilisation and allocation of surplus funds.
Banks are financial intermediaries that lend money to borrowers to generate revenue and accept deposits . They are typically regulated heavily, as they provide market stability and consumer protection. Banks include:
The primary market (or initial market) generally refers to new issues of stocks, bonds, or other financial instruments. The primary market is divided into two segment, the money market and the capital market.
The secondary market refers to transactions in financial instruments that were previously issued.