Financial System
What is Finance?
Monetary resources comprising debt and ownership of state, company or person
What is Financial System?
Deals with the financial transactions and the exchange of money between savers, investors , lenders and borrowers
What are the functions of a financial system?
A financial system is made of different intricate and complex models that link financial institutions and markets to provide financial services for stakeholders to maximize their return. Basically, create a relationship with depositors, lenders, borrowers, government and others.
Integration between the stakeholder or make them together by the money can come to the market in a systematic way and the financial services that come with this.
Take care of both short-term and long-term needs of the market participants.
How are the main types of financial institutions categorized ? Describe each one.
Banking and non-banking:
Banks provide transactions services
Create deposits or credit
Can advance credit by creating claims against themselves
For example:
Like Insurance Corporation
Mutual Fund Institutions
Intermediaries vs. Non-Intermediaries
Lend money as well as mobilise savings
Their liabilities are towards the ultimate savers and their assets are from their investors or borrowers.
Which are the main classes of financial instruments issued in a financial system? Describe them in detail.
Cash Instruments: The values of cash instruments are directly influenced and determined by the markets. These can be securities that are easily transferable. Cash instruments may also be deposits and loans agreed upon by borrowers and lenders.
Derivative Instruments: The value and characteristics of derivative instruments are based on the vehicle’s underlying components, such as assets, interest rates, or indices.
· Is based on the differences in the period of maturity of financial assets issued in these markets
· While the money markets deal in the short-term claims, the capital markets does so in the long-term claims.
Primary and secondary markets:
· Primary markets deal in the new financial claims or new securities
· Secondary markets deal in securities already issued or existing or outstanding
What does the “flow of funds” refer to? Explain in detail.
Financial accounts are used to track the net inflows and outflows of money to and from various sectors of a national economy.
I really liked your writing, your answers are clear and concise. Good job
ResponderBorrarEste comentario ha sido eliminado por el autor.
ResponderBorrarHi there!, I have read your work, our first answer is absolutely the same, in the second I added a little bit more: ‘financial systems are made of different intricate and complex models that link financial institutions and markets to provide financial services for various stakeholders operating in the financial system like depositors, lenders, borrowers, government and others´. I consider that these words can help us to understand the topic easier… to be honest, back in the day, I thought, I was not prepared to this topic, there are a bunch of new vocabulary.
ResponderBorrarIn the part of the functions of a financial system, I wrote A LOT, I could not mention all of them right now, but I can see that we saved the most important aspect: ´ link financial institutions and markets to provide financial services for stakeholders to maximize their return´.
Good job, you summarized all the topic pretty well!
Nice job. I consider that the subject of finances is very important especially for those of us who study a part of them. Your ideas are very clear and I like that you use examples for a better explanation.
ResponderBorrarYour answers are really clear to read, and to understand. We share a few ideas, great job!
ResponderBorrarHI!!! Have to admit that we have really different answers, its kind of the same but your answers and mine are really different between eachothers, but I think you're also correct!! And also I realized that since the first question haha everything it's different!! but different doesn't mean wrong just different! And I really liked that also your answers are very easy to understand c:
ResponderBorrar