Financial system

Financial system

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In finance, the financial system is the system that allows the transfer of money between savers (and investors) and borrowers. A financial system can operate on a global, regional or firm specific level. Gurusamy, writing in Financial Services and Systems has described it as comprising "a set of complex and closely interconnected financial institutions, markets, instruments, services, practices, and transactions."

According to Franklin Allen and Douglas Gale in Comparing Financial Systems:
"Financial systems are crucial to the allocation of resources in a modern economy. They channel household savings to the corporate sector and allocate investment funds among firms; they allow intertemporal smoothing of consumption by households and expenditures by firms; and they enable households and firms to share risks. These functions are common to the financial systems of most developed economies. Yet the form of these financial systems varies widely."

See also

  • Financial Services
    Financial services
    Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...

  • Global financial system
    Global financial system
    The global financial system is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level...

  • Finance
    Finance
    "Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...

  • Banking
  • Accounting records
    Accounting records
    Accounting records are all sources of information and evidence that are used in preparing, verifying and or auditing financial statements. Accounting records also includes documentation to prove ownership of assets creation of liabilities and evidence of monetary and non monetary...