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complexities of the U. s financial system - Assignment Example

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Complexities of the U. S financial system Name: Institution: Complexities of the U. S financial system The US financial system is extremely complex and is affected by a number of environmental factors, which include the economy and federal regulations. The complexities inherent in the US financial system also impact different aspects of the economy, as well as the existence of businesses and individuals in the country (Pryor, 1996)…

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complexities of the U. s financial system

Efficiently operating financial markets play a part in the health of the economy (Fabozzi, Modigliani & Ferri, 1994). Economic growth is underpinned by financial market development. Financial markets guide the flow of individual and business savings and investments, within the economy to improve the buildup of capital and enhance effective production of products and services. The price of returns on investments and credit plays a part in signaling financial market participants such as consumers and producers to channel funds, particularly from businesses and households to investors, governments, consumers and businesses. Financial markets link those who need the funds with willing lenders (Demirguc-Kunt & Ross, 2001). Strong financial markets and institutions and a wide array of financial instruments and products, meets the needs of both lenders and borrowers, therefore, the entire economy. Moreover, strong financial markets enhance the flow of funds among countries, thereby enhancing the economies. Additionally, financial markets also reduce transaction and search costs within the economy. ...
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