Role of the Financial Market to the Economy of a Nation
Financial market is one of the most important industry of every nation. There will always be a need to efficiently manage and supervise the condition of the Financial Market to increase the economic development of a state. Regulation of the financial market is actually a sensitive issue wherein complex activities are being done to define the strategic options of a country pertaining to this subject.
The major economic purpose of a financial market is to mobilize and commit resources to various branches to speed up the process of financial progression. Components of financial market, money market and capital market, provide channels for transferring the excess funds of surplus units to deficit ones which is a strategy that attracts funds from savers in surplus sector and channeling the borrowers for more profitable investment.
The usual financial system consists of a variety of institutions, instruments and markets that promote the move of financial resources between borrowers and lenders. Existing financial institutions include moneylenders, banks, insurance companies, leasing companies, venture capital funds, brokerage houses, investment trusts and stock exchanges.
The financial market plays a highly important part in the economy of a nation and the well-being of each citizen. The nation’s financial market interacts with different markets and have an impact on concerns such as wealth, inflation and economic stability in a state. The market also has its own characteristics that enables them to effectively regulate the processes involved.
A financial system is very difficult to meet the needs without appropriate regulatory framework. For a financial system to be effective and boost healthy economic development to a state, it is important to have an effective and institutional framework. Numerous strategies and approaches are already being considered by industry experts for the development of financial systems being generated.
The pro-active strategy provides legal, regulatory and organized framework which accelerates financial market development through mechanisms, institutions and financial instruments set up according to the purpose. This strategy is considered as an ideal technique economies.
Different nations are continuously modifying their financial market system to provide quality results to the inhabitants. A rise in the financial market affects notably to the whole condition of a certain land. Usually, the governing administration would hire economic experts to organize planning strategies to accomplish financial goals within a targeted time period.
National governments would commonly keep track of their economic progress through technologies that are available in this generation. A couple of approaches are accomplished if the economic standing goes up or declines. The financial market staff members and all the branches interlinked with it would do every effort to bring the economical market to a positive state.
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