discuss the role of each of the following in the financial system banks central bank surplus...

discuss the role of each of the following in the financial system banks central bank surplus unit deficent unit financial markets.

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Expert Solution

1. Banks

´Financial institution which accepts deposits from public

´Repayable on demand

´Lend money

´Borrow deposits at lower rate and lend it at higher rate

´Lending money for longer periods affects liquidity

´Mainly concerned with short term requirements of the trade

2. Central Bank

Creation and Expansion of Financial Institutions

Adjustment between Demand for and Supply of Money
Monetary authority of the country

Currency Issuer

Frames interest rate policy for the country

Credit controller and debt controller

3. Surplus units and deficient units

4. Financial Markets

Provides liquidity and marketability
Risk Sharing
Provides information
Facilitate the channnel of lending and borrowing
Exchange of goods and services
Provides foward and suture markets for risk
Internals and external debt market

There are many. I have listed out a few of them.

jeff jeffy answered 7 months ago

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