Question

1- What is Financial development Importance ?
2- What affects financial development?
3- How can you examine Financial development ?

Please give me as much as of detailed answer as possible

Answer 1

Ans. 1.

Financial Development

Its the overall development of financial institution , markets and instruments .

Importance of Financial Development -

- Helps in decrease poverty - because financial development helps achieving higher growth rate of the economy which will result in poverty rate to decrease.

- Helps firms in risk management

- enabling a firm to increase investment and production , which helps in overall growth in income generation.

Ans. 2.

Financial Development is affected by -

• microeconomic policies of a country
• geographic and cultural characteristics of a country
• level of income
• the quality of institutions of a country.

Ans, 3.

Financial development can be examined/ measured by -

• market liquidity - in a market where a firm is able to sell is asset quickly. and also easily purchase assets.
• efficiency of the market - market where there are no under valued or over valued securities .
• institutional environment of the country
• the diversity in financial markets - where wide variety of securities are exchanged in the market having different terms and conditions of borrowing.

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