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Financialservices

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Published in: Economy & Finance, Business

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  • 1.  THE ECONOMIC DEVELOPMENT OF ANY COUNTRY DEPENDS UPON THE EXISTENCE OF WELL ORGANISED FINANCIAL SYSTEM. IT IS THE FINANCIAL SYSTEM WHICH SUPPLIES THE NECESSARY FINANCIAL INPUTS FOR THE PRODUCTION OF GOODS AND SERVICES AND THERE BY PROMOTING THE WELL BEING AND STANDARD OF LIVING OF THE PEOPLE OF A COUNTRY. THUS THE FINANCIAL SYSTEM IS A BROADER TERM THAT INCLUDES FINANCIAL MARKETS AND FINANCIAL INSTITUTIONS WHICH SUPPORT THE SYSTEM.
  • 2.  THE MAJOR ASSETS TRADED IN THE FINANCIAL MARKET ARE MONEY AND MONETARY ASSETS. THE RESPONSIBILITY OF THE FINANCIAL SYSTEM IS TO MOBILISE THE SAVINGS IN THE FORM OF MONEY AND MONETARY ASSETS AND INVEST THEM INTO PRODUCTIVE VENTURES. AN EFFICIENT FUNCTIONING OF THE FINANCIAL SYSTEM FACILITATES THE FREE FLOW OF FUNDS TO MORE PRODUCTIVE ACTIVITIES AND THUS PROMOTES INVEST MENT.
  • 3.  THUS THE FINANCIAL SYSTEM PROVIDES THE INTERMEDIATION BETWEEN SAVERS AND INVESTORS AND PROMOTES FASTER ECONOMIC DEVELOPMENT.
  • 4.  IN FINANCIAL LANGUAGE MONEY AND MONETARY ASSETS ARE REFERRED TO AS LIQUIDITY. THE TERM LIQUIDITY REFERS TO CASH OR MONEY AND OTHER ASSETS WHICH CAN BE CONVERTED INTO CASH READILY WITHOUT LOSS OF VALUE AND TIME. RBI, Commercial Banks – credit creation
  • 5.  MOBILISE SAVINGS AND CHANNELISE THEM INTO PRODUCTIVE ACTIVITIES. TO ATTRACT SAVINGS FINANCIAL SYSTEM PROVIDES INCENTIVES.
  • 6.  I. FINANCIAL ASSETS II. FINANCIAL INTERMEDIARIES. III. FINANCIAL MARKETS. IV. FINANCIAL RATES OF RETURN V. FINANCIAL INSTRUMENTS.
  • 7.  BASIC PRODUCT OF FINANCIAL SYSTEM IS – FINANCIAL ASSET. A FINANCIAL ASSET IS ONE WHICH IS USED FOR PRODUCTION OR CONSUMPTION OR FOR FURTHER CREATION OF ASSETS. FOR Eg. Equity shares. Diff. PHYSICAL ASSETS
  • 8.  I. MARKETABLE ASSETS II. NON MARKETABLE ASSETS.
  • 9. MARKETABLE ASSETS ARE THOSE WHICH CAN BE EASILY TRANSFERRED FROM ONE PERSON TO ANOTHER WITHOUT MUCH HINDRANCE. Eg: SHARES , BONDS , M.F.,UTI Units, Govt. Securities etc.
  • 10.  IF THE ASSETS CANNOT BE TRANSFERRED EASILY, IT CAN BE SAY THAT NON MARKETABLE ASSETS. Bank Deposits, P.F., LIC Schemes, P.O. Certificates.
  • 11.  CASH ASSET DEBT ASSET STOCK ASSET.
  • 12.  THE TERM FINANCIAL INTERMEDIARIES INCLUDES ALL KINDS OF ORGANISATIONS WHICH INTERMEDIATE AND FACILITATE FINANCIAL TRANSACTIONS OF BOTH INDIVIDUAL AND CORPORATE CUSTOMERS. THEY MAY BE IN THE ORGANISED SECTOR OR IN THE UNORGANISED SECTOR.
  • 13.  1. DEVELOPMENT BANKS 2. INSURANCE COMPANIES (LIC & GIC) 3. UTI 4. AGRL. FINANCING INSTITUTIONS 5. GOVT. (PF, NSC) 6. EXIM BANK 7. NBFC (Hire Purchase, Leasing Co.etc.)
  • 14.  1. RBI 2. COMMERCIAL BANKS 3. CO-OP. BANKS 4. P.O. , TREASURY BILLS Etc.
  • 15.  There is no specific place or location to indicate financial market. What ever financial transactions takes place, it is deemed to have taken place in the financial market. However financial market can be referred to as those centres and arrangements which facilitate buying and selling of financial assets, claims and services.
  • 16.  1. MONEY LENDORS 2. INDIGENOUS BANKERS 3. PAWN BROKERS 4. TRADERS AND LAND LORDS.