Question

Role of financial system in economic development

Answer 1

The economic development of any country is dependent on its financial system - its banks, stock markets, insurance sector, pension funds and a government-run central bank with authority, or at least influence, over currency and interest rates. In developed countries, these two sides of the economic coin work together to promote growth and avoid runaway price inflation. When a country is still in a developing stage, the lack of a strong, sound financial system generally works against the national economy.