Meaning and Definition of Financial System in English

Define the financial system with suitable examples.

Contents

Meaning and Definition of Financial System

Financial system plays very significant role in the growth with stability of the economy. Institutions of financial system have made remarkable development and playing important role in the development. Financial system is a group of complex and closely inter-connected financial institutions, financial markets, financial services, financial instruments and financial practices and procedures etc. It comprises many institutions and procedures which affect savings created by household sector.

In the view of J.F. Bradley financial system is a field of business management which is related to suitable use and cautions selection of resources of capital so the business can be directed to fulfil its objectives.

Prof. R.L. Patnee viewed that financial system is like a bridge which provides its services to investors and people who require capital.

A financial system is a system that allows the exchange of funds between lenders, investors and borrowers. It operates at national and global level.

Following are the characteristics of financial system :

Many institutions and procedures are included in financial system.
These institutions mobilise the savings and distribute it.
Some financial institutions encourage to savings.
Individual investors, companies, industries are investors.
Financial system creates financial assets.
Financial system brings stability in financial market.
Financial system generates liquidity.

In Indian financial system banking and non-banking financia institutions are included. Financial market, financial institutions, financia sources, financial services etc. are the some main examples of financia system. Financial market is not a specific organised place but it is relate with all such areas where financial assets are dealt. Financial institution collect the savings of the people and they are the sellers of credit. Financia services work as facilitators in financial system.