Name: Tutor: Course: Date: University: Question 1 Introduction This paper will seek to explore between the real economies, which include the tangibles jobs, goods, and services, and the intangibles, which include money, interest rates, and the stock market…
These factors can be consumed in the present time or utilized with an aim of producing in the future. Economic activity is taken as real because real resources are utilized to come up with new products that can be bought and used. On the other hand, the financial system mainly focuses on either circulating funds around to enable people buy goods and services or assist people exchange ownership of resources vital for production purposes. It is worth mentioning that activities of the real economy are vital for human survival. The real economy is responsible for the production of consumer goods, food, lighting, heating, and entertainment to mention but a few (Mankiw 2008, p.162). The role of the financial system is to facilitate the production of such goods by ensuring that funds are available when needed. Therefore, the structure of the financial system comes to the fore since it would offer alternative financing windows. These institutions provide an avenue through which large or small manufacturing sectors can access finance, which would boost production. The role undertaken by the financial system in coordinating economic activities, which includes the cost of finance, profitable investment outlets, and availability of investment funds, has a direct relationship with the structure of the financial system. ...
However, it appears that most economists are in agreement that a link exists between the financial system and the real economy (Burton & Brown 2009, p317). The structure and role of the financial system The financial system is made of financial institutions and financial markets. Examples of the financial institutions include the banking system (banking institutions and the central bank), and non-bank financial institutions (insurance and pension funds). The financial markets are made of foreign exchange markets and money markets, capital markets, which include bond markets, private debt securities, public debt securities, and equity markets, and the derivatives markets. The current literature work has not fully addressed the issue of the role and structure of the financial system essential in facilitating and sustaining growth. There are two general agreements in relation to the role and structure of financial systems; first, countries with good working banks and financial markets can increase their growth pace. Secondly, better functioning financial systems reduce the burden on external financing, which hinder firm and industrial expansion (Mordi 2010, p.8). Role played by the financial sector in the economy A crucial role that the financial sector plays within an economy in the facilitation of growth is the reduction of enforcement, information, and transaction costs. This function is achieved through a number of unique functions performed by the financial sector. Therefore, the financial sector has some basic functions that include provision of efficient modes of payment for the whole economy, and intermediary between lenders and borrowers. The ...
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Banking is a typical case - one can just think about the 19 percent interest that he pays on credit cards and the 2 percent that he earns on his savings account. The undisclosed fact about banks’ profitability is their capability to measure risk, mostly in lending.
They often appear without any warnings. A financial crisis has often been deciphered as an era of sufferings that is critical enough to cause an immense change in most or all areas of this sector. The impact of financial crisis has been witnessed to affect the world economies to a large extent threatening their growth prospects (Allen & Gale, 2007).
However, the trend is in both directions. Whereas some banks have intensified their efforts to regain the foothold on the banking sector, some have done little. This is reflected by the number of people who have said that they love some banks in comparison to others.
Though financial markets can also bring together lenders and borrowers directly, still the existence of financial intermediaries is of utmost importance. This is because the direct lending approach between savers and borrowers has proved inefficient as this process can be directly traced to the barter system where there is always a need for double coincidence of wants.
With the current shifts and twists in the global economy, it is increasingly important that factors that will continue to influence markets especially in the financial sector are closely watched. With globalisation taking a toll in the world’s economical dynamics, there are bound to be issues that will continue to emerge in the financial sector since it is one of the building blocks of national and international economies (Cebula, 2011).
Financial intermediaries in financial markets are of essence to both the borrowers and the lenders, and therefore, their role in financial markets cannot be underestimated (Besley and Brigham 2011). In this essay, I will discuss the importance of financial intermediaries in financial markets by identifying the roles these play in financial markets, including both the positive and negative ways.
The contemporary world due to the urge of applying cost effective and proper managerial strategies has resulted to varied intriguing issues evidenced with global corporations. Officials concerned with activities of different institutions always seek to maximize on their managerial trends, profits as well as allow for positive business feedback (Adler & Shper, 2010, pp.285).
Again, pricing is linked with profits and customer satisfaction. In most competitive and free markets, pricing is determined by the forces of demand and supply.
In the case of oligopolistic markets, where few major players dominate the business, they are in a position to dictate pricing terms, often to the detriment of smaller players who do not have the material resources or pricing strategies to match the big players.
The contemporary health issues in Ireland are diverse springing from one end to another. There are the ones that are related to in-house people and their problems. They maybe the nursing staff, the doctors, the consultants, and so on. The other part of the picture takes onto the canvas the outward population, that is to say, the Irish people in general who come to the health care centres like hospitals, clinics, nursing homes, and so on.