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Functions of Financial System

Financial system in today’s world is perhaps the most important system among all the systems as all the economics of the world have become interlinked it has become a very complex system. The financial system in it includes all whether its banks or stock market or financial institutions. Let’s see some of the important functions which are performed by the financial system –

1. The first and foremost function which financial system perform is the channelization the savings of individuals and making it available for various borrowers which are the companies which take loan in order to increase the production of goods and services, which in turn increases the overall growth of the economy

2. It is with the help of financial system that one can make payment whenever and wherever he or she wants with the help of checks, credit card and debit card. In the absence of financial system one has to take cash wherever he or she goes which would have been impossible.

3. Financial system also provide an individual various options when it comes to protecting against various risks like risk arising from accidents, health related, etc… through various life insurance options.

4. Financial system also makes sure that one can liquidate his or her savings whenever he or she wants it and therefore individuals can have both the things, which involve return on investments as well as comfort that they can liquidate their investments whenever they want.

5. All transactions whether they involve individual buying house or a big company coming with an initial public offer they are effected smoothly because of financial system.