Question

List and briefly describe five basic roles of the financial system

Answer 1

Five basic roles of financial system as follows-

A. It helps in price discovery as it provides with a transparent platform for the buyers and the sellers in order to determine prices through demand and supply.

B. Financial system will help in balance growth of the economy as it will help the growth of all the sector including primary and secondary and tertiary sector

C. Financial system also helps in fiscal descipline and control of the economy, as government can create a congenial business atmosphere through appropriate financial system.

D. Financial system helps in economic integration because this is highly integral system which is capable of promoting economic integration of different countries

E. Financial system have also a role to play in political stability as those country has a better financial system will have a better political stability.