Business Studies, asked by naanuz6890, 1 year ago

Explain the role of financial regulators in promoting economic growth.

Answers

Answered by KHUSHIIIIIIIII
3

Relationship between financial system and economic development

The development of any country depends on the economic growth the country achieves over a period of time. Economic growth deals about investment and production and also the extent of Gross Domestic Product in a country. Only when this grows, the people will experience growth in the form of improved standard of living, namely economic development.

Role of financial system in economic development of a country

Role of financial system

The following are the roles of financial system in the economic development of a country.

Savings-investment relationship

To attain economic development, a country needs more investment and production. This can happen only when there is a facility for savings. As, such savings are channelized to productive resources in the form of investment. Here, the role of financial institutions is important, since they induce the public to save by offering attractive interest rates. These savings are channelized by lending to various business concerns which are involved in production and distribution.

Financial systems help in growth of capital market

Any business requires two types of capital namely, fixed capital and working capital. Fixed capital is used for investment in fixed assets, like plant and machinery. While working capital is used for the day-to-day running of business. It is also used for purchase of raw materials and converting them into finished products.

Similar questions