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
Why is transparency important in a market-based financial system? Why is it less important in a bank-based system?
A market originally was a place where people could go and buy and sell goods. These markets also exist today, such as fish markets and cattle markets. A free market economy is driven by individuals and basically the more effort you put in the more you get out. This then makes competition very important in a free market economy.
Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.
With the aid of relevant sources and appropriate research methodology, the researcher wishes to answer the question, “How adoption of IT did solved an existing banking problem of the Royal
Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money.
1. Describe the different kinds of financial institutions that make up the US financial system.
The United States of America’s financial system comprises of the banking system, financial markets and nonbank financial institutions. (Lee, 2001) Banking system furthermore consists of the Federal Reserve System, foreign banks, commercial banks, offshore banks, credit unions and saving institutions. Financial markets consist of debt and money markets, equities markets and futures and options markets. Lastly, nonbank financial institutions consist of asset-based finance companies, commercial lending companies and insurance companies. This paper is an endeavor to understand the workings and structure of the Federal Reserve Banks of USA.
A central bank is an independent national authority that conducts monetary policy, regulates banks, and provides financial services including economic research. Its goals are to stabilize the nation's currency, keep unemployment low and prevent inflation.
Singapore Financial System is one of the world’s largest financial systems. According to Mishkin (2009), Financial System refers to a system that consists of the markets and institutional units that interact for the purpose to provide facilities such as payment and transfer systems and organizing the funds for investment from saved surplus funds to units who have shortage
A Central Bank is a supreme bank in a country which supervises all the economic life of the nation. As the definition states “Autonomous or semi-autonomous organization entrusted by a government to, administer certain key monetary functions”, these banks have a wide range of activities, such as; implementing specific goals such as currency stability, low inflation rates and full employment. Central banks acts as the banker of the government helping in regulating monetary and financial stability, and developing stable payment system. The first central bank was found in the world was the Swedish Riksbank, founded in 1668. Second bank was Bank of England found in 1964, by William Paterson to finance a war. They became a vital part of the world today.
A financial intermediary, by definition, is responsible for the process of transferring money from economic agents with a surplus of funds to economic agents with a deficit of funds, and is known as financial intermediation. This is achieved by means of a financial security, such as stocks and bonds. The mechanism that allows the trade of such financial securities is known as a financial market. Financial markets aim to facilitate the raising of capital, as well as the transfer of risk between economic agents and also international trade. Typically, the borrower will issue a receipt, or financial security, to the lender that promises to pay back the capital gained. Securities such as these can be freely bought or sold within financial
Financial systems and financial regulators are entities setup by the government of a country to ensure the availability and flow of financial resources in a fair and lawful manner without exploitation or monopolization of the resource by individuals or organizations. The task of ensuring the availability of finance and its transference is taken up by the financial systems of a country while the task of monitoring and regulating is taken up by the financial regulator.
These are national or regional financial institution designed to provide medium- and long-term capital for productive investment, often accompanied by technical assistance, in poor countries.
Sources of finance refers to the ways of gathering various financial sources to meet the financial needs of the business. Furthermore, it states exactly how the companies are gathering and allocating finance to satisfy the requirements of the firm (Chandra, 2011). Firm either belong to existing or new categories that would need a varied amount of finance to meet the long and short term requirements such as construction, inventory, fixed assets and operating expenses (Hally, 2007).
Market economy is an economy system the individuals are owned and controlled most of the resources and are allocated through voluntary market transactions governed by the interaction of supply and demand. The presence of market economy will make a gap or disparity in society. It is happened because people are free to play in the market. In addition, there is no interference from the government and it will lead to the exploitation. It has lead to the market economy become not an option for a country to stay competitive. Competition in the marketplace provides the best possible product to the customer at the best price. When a new product is invented, it usually starts out at a high price, once it is in the market for a period of time, and other companies begin to copy it, the price goes down as new, similar products emerge.