Role Of Infrastructure And Rural Development

The fact that banks control 97% of the world's money supply makes them a vital institution. Banks are the engine of our modern financial system and a source for economic growth. The bank's ability to create credit can have destructive effects; the Great Depression of 1929 and the Great Recession of 2008. In both cases, banks spurred on an asset bubble through overextending credit to aid the purchase of assets. The result was an economic collapse that wiped out wealth and reduced credit creation which stalled productive investments. The lessons of the two great economic collapse support the notion proposed by the author, that bank credit for transactions that do not contribute to the economy should be restricted.

Financial markets are crucial to promoting greater economic efficiency by channeling funds from people who do not have a productive use for them to those who do. Well functioning financial markets are a key factor in producing high economic growth, and poorly performing financial markets, vice versa. Financial markets and intermediaries have the basic function of getting people together by moving funds from those who have a surplus of funds to those who have a shortage of funds.

“The real India lives in the villages. Unless we are able to uplift the tribals and the backward classes India faces a dark future”.

The overall development of an economy is a major factor that has significant impacts on the development of the economy's financial markets. Since well-functioning financial systems offer good and easily accessible information, they lower the costs of transaction. This in turn enhances resource allocation and strengthens economic growth. The financial services industry consists of various systems such as stock markets and banking systems that enhance growth and help in poverty reduction. However, commercial banks tend to dominate the financial system during low levels of economic development while stock markets become more active and effective during periods of high levels of economic development ("Financial Sector", n.d.). The other important systems in the financial services industry include sound macroeconomic policies, shareholder protection, and good legal systems.

Banks are the key to our growth. Banks allow us to grow because they have as we say imaginary money. Banks are allowed to loan ten dollars for every dollar they actually

Financialization can be shown in three perspectives. Firstly, financialization implicates finance regains dominant power in capitalism. Secondly, autonomy of financial institutions increases because of the increase in financial interests. Thirdly, wide range of economic actors is integrated into financial markets due to financial innovation and expansion of financial sector (Palley, 2007).

Banks, specifically, lessen expenses of securing and preparing data about firms and their supervisors and in this manner diminish office costs as they have created ability to recognize great and awful borrowers. Moreover, bank loaning is prone to be critical when financial specialists face ex post good risk issues, with firms of higher recognizable qualities getting from the capital business. Conversely, market-based economies encounter essentially and solidly stronger bounce back than the bank-based ones. In the US, the UK and Japan, the stock exchange assumed an imperative part in financing financial development, while the managing a banking sector assumed a more vital part in Germany, France, Japan and Korea. Besides, the managing a banking sector and stocks in every nation were corresponding to one another during the time spent monetary development aside from the US, where the two segments were gently

C) decreases the amount of funds that business firms can raise by selling newly-issued stock.

In this paper, we are critically appraising the articles by Menger (1892), Goodhart (1998), Rogoff (2014) and Yermack (2013) respectively. The first two papers focused on the origins of money and the theory behind this while the second two papers focused on the future of money. We will be comparing the conclusions of each author in their papers and giving commentary on them.

Reports by Fry (1997) suggests that measuring financial distortions with black market exchange premiums rates and real interest rates squared lowers investment ratios eventually leading to a reduction in growth output. In the same vein, Roubini and Sala-i-Martin (1992) also revealed that financial repression is negatively related to growth while controlling other growth determinants; hence interest rates (bank-reserve requirements) correlates inversely with growth.

The theoretical framework on the effects of capital market on economic growth dates back to the work of Schumpeter, (1911) which explained that a well developed financial system can facilitate technological innovation and economic growth through the provision of financial services and resources to investors. The above argument of Schumpeter, (1911) was later advanced as the McKinnon-Shaw, (1973) hypothesis, which is a policy analysis tool for developing countries with strong recommendation and high priority on the efficiency of financial systems in facilitating capital accumulation and financial intermediation.

The features or characterizations (as stated by Miller, 1986 and Merton, 1992) of Financial innovation is the ability to generate additional sources of funds and act as an “engine of economic growth” (Josh, L. Peter, T. 2011). It is indeed true that these breakthroughs generate additional sources of funds for the firm but it also has the potential to affect the entire economic system. Perhaps even leading to far reaching changes (as further firms down the line can adopt the changes that came as a result of the financial innovation) e.g. FI enable firms to raise capital in larger amounts at a lower cost than they could otherwise, by developing a more (say) cost efficient form of production. The next firm down the line can then benefit from the lower cost production (as they would be able to access or learn this new form of cost saving from the previous firm). This is an example of FI’s influence on economic systems and being a driving force for growth.

Coming from a rural part of North Carolina, I have seen and interacted with many people experiencing issues that pertain to rural poverty. The issue that I have been captured by currently pertains to food access and healthy nutrition, as many rural residents find themselves in food deserts. I personally have always found this somewhat ironic since one of the major sources of economic capital in our region is from agriculture. However, many of the people who live right next to farms cannot meet their basic nutritional needs as they resort to cheaper foods to feed their families.

Financial development boosts economic growth have been shown by the increasing number of scholars, however whether the financial sector development could benefits the income distribution is still controversial. Under this question, this essay try to use statistically method to explore the relationship between income inequality and financial sector development.

Financial economies: - several little businesses realize it laborious to get finance and once to get finance is commonly quite high. This can be as a result of little businesses that have developed an honest data. Massive corporations thus realize it easier to seek out potential loaner and to boost cash at lower interest rates.