Financial Market - Role (Financial System and The Economy)

Role (Financial System and The Economy)

One of the important requisite for the accelerated development of an economy is the existence of a dynamic financial market. A financial market helps the economy in the following manner.

  • Saving mobilization: Obtaining funds from the savers or surplus units such as household individuals, business firms, public sector units, central government, state governments etc. is an important role played by financial markets.
  • Investment: Financial markets play a crucial role in arranging to invest funds thus collected in those units which are in need of the same.
  • National Growth: An important role played by financial market is that, they contributed to a nations growth by ensuring unfettered flow of surplus funds to deficit units. Flow of funds for productive purposes is also made possible.
  • Entrepreneurship growth: Financial market contribute to the development of the entrepreneurial claw by making available the necessary financial resources.
  • Industrial development: The different components of financial markets help an accelerated growth of industrial and economic development of a country, thus contributing to raising the standard of living and the society of well-being.

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