Finance system

<b>Finance system</b>

Finance system. It is made up of the set of markets and institutions that channel resources from economic units with savings to those that are in deficit.

In simpler terms, the financial system of a country makes possible the functioning of the markets that connect the supply and demand of savings. The financial system channels the savings generated mainly by families to companies.

Its function is considered fundamental in market economies to make the transformation of savings possible
in investment.

The importance of the Savings - investment channel:

  • The need to interconnect savers (eg families) and investors (eg companies), that is, the units that have a saving surplus with a deficit, since there is no coincidence between them.
  • The wishes of savers often do not coincide with those of investors regarding the degree of liquidity, security and profitability of the assets issued. Hence the need to superimpose various markets that allow adjusting the needs and preferences of savers and investors.
Terms related to the Financial System
Definition of financial system - Banking System - Banks - Savings Banks - Credit Institutions - Savings Institutions - Credit System - Credit Corporations -

Video: Sem 3 - Indian Financial System IFS - Syllabus Discussion - Eng. medium - By Heer Soni (May 2021).