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Factor Determining Saving - Saving and Financial Intermediation, Indian Financial system Video Lecture | Indian Financial System - B Com
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FAQs on Factor Determining Saving - Saving and Financial Intermediation, Indian Financial system Video Lecture - Indian Financial System - B Com
| 1. What is the role of financial intermediation in determining saving? |  |
Ans. Financial intermediation plays a crucial role in determining saving by facilitating the flow of funds from savers to borrowers. Intermediaries such as banks, non-banking financial companies, and mutual funds collect savings from individuals and channelize them towards productive investments. They provide a range of financial products and services that encourage saving, such as savings accounts, fixed deposits, and investment schemes. By offering attractive interest rates and investment options, financial intermediaries motivate individuals to save and contribute to the overall savings in the economy.
| 2. How does the Indian financial system impact saving? | |
Ans. The Indian financial system influences saving through various channels. Firstly, it provides a wide array of financial products and instruments that enable individuals to save and invest their money effectively. Secondly, the system regulates interest rates, which can influence the propensity to save. Higher interest rates can incentivize saving, while lower rates may discourage it. Additionally, the financial system's stability and accessibility play a crucial role in shaping individuals' confidence and willingness to save. A well-functioning and inclusive financial system can promote saving by ensuring the safety of deposits and providing convenient avenues for saving.
| 3. What are the factors that determine saving in the Indian financial system? | |
Ans. Several factors influence saving in the Indian financial system. Firstly, income level plays a significant role, as individuals with higher incomes tend to save more. Secondly, the interest rate environment affects saving behavior. Higher interest rates generally encourage saving, as they offer better returns on savings. Thirdly, consumer confidence and economic conditions influence saving. During uncertain times, individuals may choose to save more as a precautionary measure. Lastly, cultural and social factors also play a role, as saving habits vary across different regions and communities in India.
| 4. How does the availability of financial services impact saving in India? | |
Ans. The availability of financial services plays a crucial role in determining saving patterns in India. When individuals have easy access to a wide range of financial products and services, they are more likely to save. Accessible banking services, such as savings accounts and fixed deposits, provide convenient options for individuals to park their savings. Moreover, the availability of investment opportunities, such as mutual funds and government securities, allows individuals to diversify their savings and potentially earn higher returns. Therefore, a well-developed and inclusive financial system with widespread availability of services can encourage saving in India.
| 5. How does the taxation system influence saving behavior in India? | |
Ans. The taxation system in India can significantly impact saving behavior. The government offers various tax incentives and exemptions on specific savings instruments, such as Public Provident Fund (PPF), National Savings Certificate (NSC), and tax-saving fixed deposits. These incentives encourage individuals to save by providing them with tax benefits. Moreover, the tax treatment of investment returns also influences saving decisions. For example, if investment returns are taxed heavily, individuals may be inclined to save more to minimize their tax liabilities. Therefore, the taxation system plays a crucial role in shaping saving behavior in India.
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Nov 16, 2024 Last updated |
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