Question

What are the main characteristics of a stable financial system?

Answer 1

Stable Financial system is a system in which the financial markets and the financial institutions operate freely without any risk of up and downs in the economy. Investors can easily invest there money iin the financial markets and the borrowers can easily obtain funds.

Main Characterstics of Stable Financial Syatem are:

1. Investors can invest there money in the market at fair rate of return.
2. Borrowers can easily obtain funds to fulfill there capital requirement.
3. Timely Financial disclosures in the financial market.
4. Easy exchange of currencies in the market.
5. Market risks being offset by hedging.
6. Markets where trading can be done easily without any fear of incurring additional costs.

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