Exam questions - Coursework Example

There are different types of financial systems without which simple transactions such as trading and investment are thought to be impossible. The financial systems in different societies include those that operate locally or regionally and those that control company transactions internationally(Mike & John, 2004). The financial system pull together, maintain and give a detailed report on economic transactions. Financial systems support the relationship between internal and external financial transactions and financial reporting.

They also play a role in helping manage, plan and budget finances available. Financial systems play a role in the allocation and distribution of resources, mainly by directing household savings to the corporate sector and investments among firms. This allows the smooth flow of goods and services between households and firms. Well-structuredfinancial systems are necessary for economic and financial stability in a state of increased working capital. The lack of a financial lead to major changes because there would be no access to components such as credit, no monetary value for exchange of goods and services hence becoming a major barrier to economic transactions.

Weak financial systems are inadequate and they create issues such as inflation and debts. They are also faced by the threat of fraudulent manipulation by malicious people and above all may lead to a serious financial crisis. A financial center is a market or city that meets the major part of the demand for financial services of both domestic and international market and it is a key component of a financial system. Most developed countries have a major financial center for example in Europe; London, Paris, Frankfurt in the United States the financial center is based in the New York.

Such financial centers are facing competitions hence most of them are unstable(Berger & David, 1997). There is