Assignment Sample on Global Financial Intermediation
1. Introduction
A financial system is considered an activity that helps to identify funds exchange between participants of the financial market, including borrowers, investors, and leaders. However, the financial system plays an essential role in operating a country’s economy on a global and national level. However, financial support plays a critical role in scarce resources to increase productive finance investments. In this essay, the part of productive investments in the financial system has been explained with the help of different theoretical approaches. Apart from that, the importance of financial intermediation in the financial system helps to identify productive investments by various scarce resources.
2. Main body
2.1 Key roles of the financial system
Financial role plays a crucial role in the development of a country’s economy that has a significance in both national and global financial markets. As stated by Campiglio et al. (2018), industries and finance are financed by this system that has an essential role in developing employment and an increment of economic captivity as well. Hence, intermediates of the financial system play a significant role in increasing economic growth and increase the efficiency of improvement in different financial purposes. Investment planning is an essential substance in the financial system that creates a proper path and method for any investment. Role of the financial system in growth of country’s economy are;
Investment and saving relationship
Financial system directly and efficiently helps the inflow of investment and savings in a country’s economy. As stated by Nosova (2017), different financial institutions such as the banking sector play an essential role in maintaining proper relationships between savings and investments. The economic system allows depositors to invest their principal in several deposits such as RDs and FDs by giving different exciting interest rates. Hence, the financial system plays a significant role in saving the country’s economy that could help the government to improve its economic structure. Banking sectors have an essential part in the financial system to increase employment of every different organisation.
Growth of capital market
Business funding production and activity need a particular amount of capital by business entities that help improve the country’s economy. As stated by Totenhagen et al. (2019), the financial system helps to strengthen two types of capital, including fixed capital and working capital that work as an essential substance in a country’s economy. However, different business entities focused on the financial system to increase their capital market growth and raise funds for both long- and short-term investment or money requirements.
Foreign exchange market
Foreign exchange markets have a significant role in importers and exporters receiving and raising funds for transaction settlement. As stated by Campbell-Verduyn (2019), the financial system plays a vital role in the foreign exchange market by reducing interest rate and increasing profit amount as well. Hence, the business market provides investors with opportunities to invest idle funds as short-term investments and earn profit. Therefore, the financial system helps to stand firm in the foreign exchange market to make a profit from existing and new investments.
Government securities
The financial system enables them to raise funds from the Country government whereas help them to borrow interest at a lower rate. As stated by Campbell-Verduyn (2019), central and state governments could raise long and short-term funds from the market of government securities to finance capital requirements for issuing bonds and bills. However, this has a significant role in the country’s economy by borrowing funds from the business market and treasury billing issues. The financial system could play an essential role in improving the country’s economic value and government securities as well.
Growth And infrastructure
Financial infrastructure has strong economic growth and the bearing of financing issues of a particular country. As stated by Totenhagen et al. (2019), financial infrastructure has a significant role in the financial market, financial assets, and intermediates as well that plays as three pillars of a country’s economy. Hence financial services play a crucial role in fund provident and improving infrastructure and growth of a particular industry or organisation. However, this serves as a link between investors and savers that facilitates resource transfer between them.
Balance economic growth
Economic growth mostly depends upon every country’s financial system to balance growth that can be attained with the help of promoting growth of every sector. As stated by Totenhagen et al. (2019), economic growth is channelised by the financial system regarding available funds and balanced development of different industries. Hence, the financial system helps to build balanced economic growth of a country and resources as well.
2.2 Importance of financial system in scarce resources
The term Scarcity can be described as the fundamental problems faced by different organisations and the gap between business planning and its execution. Hence, scarce resources help identify all issues or challenges faced by other organisations to plan a proper financial system. As stated by Diamond (2020), insufficient resources help to make appropriate decisions about how to allocate adequate resources for satisfying the basic needs of an organisation. Hence financial markets play an effective and crucial role in scarce resource allocation of different economies to perform essential functions such as liquidity provident in financial assets, price discovery and mobilisation of savings. Scarcity generally falls into three categories including supply-induced, demand-induced, and structural.
Resource scarcity theory helps to identify what challenges or problems a particular company is facing due to several issues related to different factors such as economic, environmental, and political factors. As stated by Löfqvist (2017), resource scarcity acts as a strength booster of a company and produces a proper and compelling business plan to remove all those scarcities faced by a company. Hence, the financial system helps identify different problems faced by a particular company whereas improving mismatches between demand equilibrium and the desired supply. The economic system helps to strengthen two types of capital, including fixed capital and working capital that work as an essential substance in a country’s economy (Diamond, 2020). However, this has a significant role in the country’s economy by borrowing funds from the business market and treasury billing issues.
On the other hand, the financial market has a significant role in scarce resource management that could help to improve a company’s economy. As stated by Löfqvist (2017), insufficient resources help to identify all problems or challenges faced by different organisations to plan a proper financial system. As compared to Resource scarcity theory, scarcity takes place in every economic development of an individual company and scarcity resources are designed to solve all problems faced by an organisation or its employees due to lousy management issues (Löfqvist, 2017). Whereas, financial system plays an influential role in scarce resource allocation by performing following functions;
Mobilisation of savings and its use
The financial market mainly focuses on savings transfer from savers to investors, whereas it could improve a particular organisation’s economic structure and business plans. Compared to principles of scarcity resources, it has a significant role in short- and long-term investments by the savers. As stated by Velenturf and Purnell (2017), the financial system gave choices to the savers about different investments that have a significant role in channelising surplus funds for productive use. Hence financial services play a crucial role in fund provident and improving infrastructure and growth of a particular industry with the help of scarcity resources.
Price Discovery
Price discovery is an essential substance of different financial systems that help to fix a particular price discovery for a company or entire industry. As stated by Mannelli (2020), forces of supply and demand help to establish better and effective prices for services or commodities in a market. Hence, householders act as an investor for supplying business firms and funds as per business demands in the financial market. Interaction between investors and savers has a significant role in price establishment that positively impacts financial assets that aretrading in the target business market.
Providing liquidity as financial assets
The financial system describes the easy purchase and sale of financial assets in the target market. As stated by Mannelli (2020), financial markets provide proper and adequate amounts of liquidity for financial support that have a positive effect on a company’s economic value. Hence, the liquidity of financial assets can be easily converted into raw money or cash ever needed. Asset’s holders are free to sell their financial support in the financial market through different mechanisms (Mannelli, 2020). Industries and finance are financed by this system that has a vital role in developing employment and an increment of economic captivity as well.
2.3 Productive investments in finance
The commission is described as productive investments in immaterial assets or fixed capital for the enterprise. As per the view of Moseet al. (2020), productive investments are usedto produce services or goods that have a significant role in a country’s economy. However, productive assets can generate cash flow or profit. Measurement of finance for productive investments is considered largely unobservable data that needs to be appropriately managed to improve investment amount by savers. However, it is a state of being able to produce products at a quick speed and high quality (Moseet al. 2020). On the other hand, the financial system has a positive effect on productive investment by improving a particular organisation or industry’s employment.
Accelerator theory of investment showed investors need to increase the amount of investment to increase customer demand. As stated by Kazakova and Kuzminykh (2017), productive investment helps the organisation to meet rising demand by customers. Hence, the financial system helps to build proper planning and execution for appropriate investments. Therefore, financial services play a crucial role in fund provident and improving infrastructure and growth of a particular industry or organisation. Initiatives and finance are financed by this system that has a vital role in developing employment and an increment of economic captivity as well (Kazakova and Kuzminykh, 2017). The financial plan helps identify different problems faced by a particular company, whereas improving mismatches between demand equilibrium and the desired supply.
Productive investments have several positive effects on company fact that also help in a country’s economy. The financial system gave choices to the savers about different assets that have a major role in channelising surplus funds for productive use (Elibrary.imf.org, 2017). These choices result in a positive increment of productive investment in the financial system. Hence, investors need to invest a large amount of savings in improving their existing business plan with new business strategies. The financial market mainly focuses on savings transfer from savers to investors, whereas it could use improvement the economic structure of a particular organisation and its business plans. However, liquidity of financial assets can be easily converted into raw money or cash ever it is needed (Elibrary.imf.org, 2017).
The finance system plays an important role in productive investments that have a significant role in the scarce resource allocation of different economies to perform important functions. These functions include liquidity provident in financial assets, price discovery and mobilisation of savings (Bis.org, 2017). On the other hand, it has different activities performed by different investors to invest in both long- and short-term business projects. Hence, Interaction between investors and savers have a significant role in price establishment that have a positive impact on financial assets that are being traded in the target business market. However, householders act as investors for supplying business firms and funds as per business demands in the financial market.
2.4 Allocation of scarce resources in productive investments
Scarce resources help identify all problems or challenges faced by different organisations to plan a proper financial system. As argued by Mannelli (2020), scarce resources help to make proper decisions about how to allocate effective resources for satisfying the basic needs of an organisation. In addition, scarce resources play a major and crucial role in productive investment. Hence financial services play a crucial role in fund provident and improving infrastructure and growth of a particular industry with the help of scarcity resources (Alhejaili, 2021). The financial system helps to improve two types of capital, including fixed capital and working capital that work as an important substance in a country’s economy.
As compared to resource scarcity theory, this has a significant role in the country’s economy by borrowing funds from the business market and treasury billing issues. Apart from that, every individual company should focus on the financial system that helps the company to stand strong in the target business market (Robinson, S.A. and Dornan, 2017). Resource scarcity acts as a strength booster of a company and produces a proper and effective business plan to remove all the company’s scarcities. On the other hand, scarcity takes place in every economic development of an individual company and scarcity resources are designed to solve all problems faced by an organisation or its employees due to bad management issues. This has a major impact on the company’s economy; thus, company managers should focus on the company’s resource management (Storm, 2018). Productive investments are usedto produce services or goods that have a significant role in a country’s economy. According to the Accelerator theory of investment, financial systems help identify different problems faced by a particular company, whereas improving mismatches between demand equilibrium and the desired supply.
The financial system has a significant role in productivity, whereas it has a great effect on a country’s economy as well. Scarcity resource management helps to identify problems regarding the financial system within a particular company. Central and state governments could raise long and short-term funds from the market of government securities for financing requirements of capital for issuing bonds and bills (Cannon et al. 2019). The business market provides investors with opportunities to invest idle funds as short-term investments and earn profit. The financial system in scarcity resources helps to identify the challenges or problems a particular company faces due to several issues related to different factors such as economic, environmental, and political factors. Overview of scarcity resources showed financial infrastructure has a significant role in the financial market, financial assets, and intermediates that play as three pillars of a country’s economy (Elibrary.imf.org, 2017).
2.5 Importance of financial intermediation in the financial system
Financial intermediation is described as an activity that identifies productivity by institutional unit incurs liability for occurring financial assets by involving financial transactions in the business market. As stated by Cannon et al. (2019), productive investment helps the organisation to meet rising demand by customers. Resource scarcity acts as a strength booster of a company and produces a proper and effective business plan to remove all those scarcities faced by a company. However, financial systems have a significant role in financial intermediation that help the company to increase its economic value as well. This helps the company stand strong in the competitive market that helps the company build a strong and solid business plan (Elibrary.imf.org, 2017). Banking sectors have a significant role in the financial system to increase employment of every different organisation.
Householders also act as investors that help the company or organisation produce goods and effective services in the target business market. As argued by Robinson and Dornan (2017), financial intermediation an activity that identifies productivity by institutional unit incurs liability for occurring financial assets by involving financial transactions in the business market. Therefore, financial organisations such as microfinance institute and banking organisations need to develop financial service and products in order to promote social networking (Elibrary.imf.org, 2017). Financial system helps to identify different problems faced by a particular company, whereas improving mismatches between demand equilibrium and desired supply.
Scarcity takes place in every economic development of an individual company, and scarcity resources are designed to solve all problems faced by an organisation or its employees due to bad management issues (EDEH, 2020). Hence, resource scarcity acts as a strength booster of a company and produces a proper and effective business plan to remove all the company’s scarcities. The business market provides investors with opportunities to invest idle funds as short-term investments and earn a profit (Storm, 2018). Based on different arguments, financial intermediation faced risks due to a lack of proper knowledge and information, whereas financial markets faced different challenges due to poor financial systems.
The financial system has a crucial role in the scarcity of resources to improve the company’s productive investments. Besides, scarce resources help identify all problems or challenges faced by different organisations to plan a proper financial system. Financial market mostly depends on financial intermediation that has a significant role in a company’s economic value.
3. Conclusion
The present essay can be concluded as financial support plays an important role in scarce resources in order to increase productive investments in finance. Several industries and finance are financed by this system that has an important role in developing employment and an increment of economic captivity as well. The financial system gave choices to the savers about different investments that have a major role in channelising surplus funds for productive use. On the other hand, financial intermediation activity identifies productivity by institutional unit incurs liability for occurring financial assets by involving financial transactions in the business market.
This helps the company stand strong in the competitive market that helps the company build a strong and solid business plan. Financial system has a positive effect on productive investment by improving a particular organisation or industry’s employment. Economic growth is channelised by the financial system regarding available funds and balanced growth of different industries.
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