Advantages And Disadvantages Of Market Based Financial System

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1(a) Financial System is a complex yet connected system that consist of financial intermediaries, financial institutions and financial assets.
Components of Financial System
1. Financial Institutions
2. Financial intermediaries
3. Financial markets
4. Financial services and money

1(b) A market based financial system is preferred over bank based financial system because, bank based has focused on only mobilization of funds from investors, capital allocation , investment decisions of managers and provides for risk management whereas in market based financial system it focused on exerting control over corporate structures, society fund savings, easily risk management etc. when compared as to which showed better results, market based showed better results as it showed effective financial delivery and focuses on how to manage risks rather than how to manage risks after the happening of the event and how to effectively invest savings whereas bank based focused on mobilizing funds and allocation of capital.
1(c)
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It was established in the year 1974 and officially started operating on 1st April 1975. It is governed by Dr Ali Bin Mohammed Bin Moosa. The main function of central bank is to maintain economic stability in the country and also to maintain the internal and external value of national currency. It is also responsible for providing monetary and financial benefits to commercial banks and financial institutions of the country and also committed to help them in case any economic crisis. The capital base of the Central Bank of Oman was one million Omani Rials at the beginning of operations in the year 1975 and later was strengthened over time and since April 2002 it has remained at 300 million Omani Rials. At the end of 2005, Central banks assets/liabilities totaled up to RO 1826.4
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