Inter-relationship in the Financial System
- A financial system provides services that are essential in a modern economy. Financial instruments (equity, debt etc.) with attractive return and liquidity encourage saving in financial form. By evaluating alternative investments and monitoring the activities of borrowers, financial institutions increase the efficiency of resource use.
- Access to a variety of financial instruments enables an organization to pool resources in the markets. Further, trade, the efficient use of resources, saving and risk taking are the cornerstones of a growing economy.
- In fact, the country could make this feasible with the active support of the financial system. Thus, the financial system has been identified as the most refurbishing factor for growth of the economy, making it one of the important inputs for development.
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