In finance, the financial system is the system that allows the transfer of money between savers (and investors) and borrowers. A financial system can operate on a global, regional or firm specific level. Gurusamy, writing in Financial Services and Systems has described it as comprising "a set of complex and closely interconnected financial institutions, markets, instruments, services, practices, and transactions."
According to Franklin Allen and Douglas Gale in Comparing Financial Systems:
"Financial systems are crucial to the allocation of resources in a modern economy. They channel household savings to the corporate sector and allocate investment funds among firms; they allow intertemporal smoothing of consumption by households and expenditures by firms; and they enable households and firms to share risks. These functions are common to the financial systems of most developed economies. Yet the form of these financial systems varies widely."
Famous quotes containing the words financial and/or system:
“Creditor. One of a tribe of savages dwelling beyond the Financial Straits and dreaded for their desolating incursions.”
—Ambrose Bierce (1842–1914)
“It would be enough for me to have the system of a jury of twelve versus the system of one judge as a basis for preferring the U.S. to the Soviet Union.... I would prefer the country you can leave to the country you cannot.”
—Joseph Brodsky (b. 1940)