Financial Institutions And The Economic Growth Of An Economy

For the last twenty eight years, China has been quickly growing into one of the largest economies in the world. China has accomplished this feat, in part, by radically changing their policies on trade and free market interactions with other countries. During this process, China has bought approximately one hundred trillion dollars of United States debt in the form of Treasury bills, notes, bonds, and Inflation Protected Securities (Amadeo). This debt has given China leverage against the United States which has enabled China to keep the value of the United States dollar high, while keeping the value of the Chinese yuan low. As the inflation of the dollar continues to negatively affect the

China has been improving its economy from last few years.It is only due to its efforts to overcome USA

In 2008, the Global Financial Crisis broke out; both the American economy and the economy in the West suffered a hard blow. However, a big economy system in the East emerged unexpectedly. China is now able to challenge the America’s decades-long dominant position in economic area. Started during the middle of 1990s, China’s manufacturing industry developed rapidly that billions of exports were floating out, and China was given the title of “the world’s factory”(BBC). By the end of 2010, China with a GDP of $5.8 trillion, surpassed Japan’s GDP of $5.48 trillion, became the world’s second largest economy system (BBC). China also exceeded Japan became America’s largest foreign securities holder. Since then, China has been seen as the US’s

1. Find a recent  (August 2011‐  present) money and banking related article in the media (the Economist, Globe and Mail, National Post, New York Times, etc.,), and attempt to explain parts or all of it using the tools we learned in class. Highlight the sentences that you analyze, and hand in the article along with your work. Use written and graphical explanations. (approximately 3 double spaced pages)

China is a growing country; its population is about 1.4 billion, and as of 2014, the Chinese economy is the world’s second largest (in terms of nominal GDP,) totaling approximately US$10.380 trillion, with a growth rate of 7.4%, and the GDP per capita is US$3,619.4. From last century to this century, China has had significant improvements in their economic development. China had been in three major crises during the last century: the 20th century. The Fall of Qing Dynasty, World War II, and Civil War in China, all of them struck China in a destructive way. From the end of the 20th century, China was in a fast-developing mode.

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.

China has been let down for years because financially it is labeled as a poor country,

The government of china is very keen to encourage foreign investors, because foreign companies are regarded as relatively good corporate

Since opening up its market to foreign trade and free market returns in 1979, China has been one of the fastest growing economies, with GDP growth averaging nearly 10% through 2014. China is a major global economic leader, and is the world’s largest economy (purchasing power), manufacturer, merchandise trader, and holder of foreign exchange reserves .

The specific issues being studied are all linked to economic growth and financial development. The authors use a certain method to help them in their research. “After considering the panel characteristics of the dataset, long-run relationships among financial development, economic growth and

Discuss the functions of financial institutions within a financial system and give examples of financial services and products that are traded by these institutions.

In the past two decades, economic analysts and policy makers have recognized that the financial system can significantly contribute to economic growth. Observing the changes that have taken place, a result has arisen that a liberalized financial sector operating in a competitive, open environment with market-based supervision based on international norms, is the best contribution to economic development. The new market-based paradigm for the design of financial systems contrasts with earlier thinking about the appropriate role for official intervention in the financial system. In the past, financial institutions, especially banks, were considered "special" entities in which it was appropriate for governments to intervene regularly in detecting a wide range of economic and social objectives . While, in earlier times, the financial sector differentiated strongly among countries and influenced by national rules .

(30% per year), the fastest growing of Chinese Economy (an average rate of 10% per year since 1990)

The economic development of most of the countries depends upon the efficiency of a well organized financial system. It is the financial system which is supply the necessary inputs for the production of goods and services in turn promotes increases the well being and standard of living of the people of a country. Thus, the financial system is a broader in term under its fold the major assets traded in they in the financial system are money and monetary assets. The major responsibility of the financial system is to mobilize the savings in the form of money and monetary assets and invest them productive ventures. An efficient functioning of the financial system facilitates the free flow of funds to promote productive activities and thus promote investment. The financial system promotes the intermediation between the small savers and investors and promotes faster economic development

List of abbreviations List of tables Acknowledgements Abstract 1. 2. 3. 4. 5. 6. 7. 8. Introduction Problem statement Objectives and hypothesis of the study Literature review Structure and performance of the financial sector in