This paper will, therefore, identify and discuss some of the key and contemporary issues that have emerged in the financial services sector. The main aim will be to bring into focus some of the key issues in the nature and functionality of financial systems that continue to influence the economy and other financial service operations. To begin, it has been noted that the financial systems in the contemporary society have increasingly been associated with a linkage to overall economic conditions of nations. This will be discussed in the section that follows. Links between the Financial System and the Real Economy The relationship between a financial system and the real economy can be clearly understood in three components. They include the composition of aggregate demand, level of aggregate demand and allocation of resources. Composition of Aggregate Demand The financial system plays an important role in the economy in various ways. At the beginning, one should mention aggregate demands in relation to the total expenditure of goods and services of an economy for a specified period for a specified price (McEachern, 2011). The financial system of an economy has a bearing on the way its aggregate demand is constituted. One of the ways it influences economic dynamism is in the way it acts as a facilitator of lending on the one hand and borrowing on the other. Since scarcity is one of the great hindrances to economic growth, by providing a means of obtaining extra resources to offset deficits, the financial sector is therefore a good linkage to economic growth (Burton and Brown, 2009). In effect, the financial sector plays a direct role in the effective planning of expenditure independent of an individual or organization’s present income. A good example is the way creditors or lending institutions are able to store wealth for future consumption through giving out at certain levels of interest whereas borrowers are able to acquire finances to make purchases in advance of income. The result of positive influence of a well regulated and efficient financial system will lead to a relatively higher investment rate than that of consumption in the given economy. Since economic growth relies on investment levels, a financial system is, therefore, a necessary component of the economy. Level of Aggregate Demand Financial development levels may also have an influence on the level of aggregate demand. The level of agreement is subject to the rate of flow of the finances or money in the financial system. A high flow, or otherwise referred to as velocity, is a great determinant of the level of aggregate demand. In a financial system, individuals or lending institutions may decide to retain the cash they have at their disposal as a result of taking precautions for speculative purposes or by having them in solid assets. As a result, the flow or velocity of finances may be lowered as a consequence of decreased liquidity. On the other hand, a well functioning financial system that is able to effectively produce a range of assets that are liquid in nature may help reduce the amounts held by the said parties in the financial markets. The resultant effect will be that of increased velocity of money in the economy which is healthy for economic growth enhancement. The level of aggreg
Contemporary Issues in Financial Services Insert Name Insert Grade Course Insert Submission Date Contemporary Issues in Financial Services Introduction Over the years, global trade has depended a lot on the control and operation of financial services…
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.
In order to discuss the link between the financial system and the real economy, the paper will first discuss the structure and role of the financial system and then later the link between the two. The real economy consists of households, firms, and other agencies involved in the production of goods and services.
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.
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.