GROUP 1

Lynne Cuenca
Honeylie Lumambas
Sharina Gierza
Ammie Alibutdan
Eden Gemoya
Gerlie Gale
Micha Caspe
Jomar Mahilum
Grethel Emollen
Charry Velez
BSBA 4B
 What
is
FINANCIAL SYSTEM?
FINANCIAL SYSTEM
The Financial System is a network of financial
institutions, financial markets, financial instruments
and financial services to facilitate the transfer of
funds .

The system consist of savers, intermediaries,

instruments and the ultimate user of funds.
FUNCTIONS OF FINANCIAL SYSTEM

 PRICE DETERMINATION

 MOBILIZATION OF SAVINGS

 ENSURES LIQUIDITY

 SAVES TIME AND MONEY

1. PRICE DETERMINATION
Demand and supply of an asset in a financial market
help to determine their price.

2. MOBILIZATION OF SAVINGS
A financial market helps in connecting those with
money with those who require money.
3. ENSURES LIQUIDITY
Assets that buyers and sellers trade in the financial
market have high liquidity .It means that investors can
easily sell those assets and convert them into cash
whenever they want .
4. SAVES TIME AND MONEY
Financial markets serves as a platform where buyers
and sellers can easily find each other without making too
much efforts or wasting time.
COMPONENTS OF FINANCIAL SYSTEM
• Financial Institutions
• Financial Markets
• Financial Instruments(Assets or Securities)
• Financial Services
• Money
1. FINANCIAL INSTITUTIONS
• Facilitate smooth working of the financial
system by making investors and borrowers
meet. They mobilize the savings of investors
either directly or indirectly via financial markets ,
by making use of different financial instruments
as well as in the process using the services of
numerous financial services provider.
2. FINANCIAL MARKETS

• A financial market is the place where

financial assets are created or
transferred. It can be broadly categorized
into money markets and capital markets.
3. FINANCIAL INSTRUMENT

• This is an important component of financial

system . The products which are traded in
financial market are financial assets,
securities or other type of financial
instruments .
4. FINANCIAL SERVICES

• Financial services consist of services

provided by asset management and liability
management companies .They help to get the
necessary funds also make sure that they are
efficiently deployed.
5. MONEY

• Is understood to be anything that is

accepted for payment of products and
services or for payment of debt. It is a
medium of exchange and acts as a store of
value.
FINANCIAL MARKETS AND ECONOMIC FUNCTIONS

• Financial Markets refers to a marketplace where buyers and sellers

participate in the trade. It is a platform that facilitates traders to buy and sell
financial instrument/securities.

IMPORTANCE FUNCTION

Helps in economic growth of country Determines the prices of assets traded

Helps savers to become investors Reduces the cost of transaction
Helps businesses to raise money to Provides a liquidity of the financial assets
expand their business
INSTRUMENTS TRADED IN FINANCIAL MARKET

• FINANCIAL ASSETS
• SECURITIES
• OTHER TYPE OF FINANCIAL INSTRUMENTS.
CLASSIFICATION OF FINANCIAL MARKET

• Primary Markets
-is where corporate and government entities can raise
capital and where the first transactions with the new issued
securities are performed.
• Secondary Markets
-where previously issued securities are traded among
investors.