Financial Institutions And The Financial System

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Recommended: Concept of financial intermediaries

1) On a regional level, the financial system is an interconnection of financial institutions, markets, instruments and regulators which allow for the transfer of money from savers to borrowers. Each country has an organized body that regulates the financial system, usually the Ministry of Finance, and in a global view, there are organizational bodies which supervise the overall financial system such as the World Bank and the International Monetary Fund. The components of a sound and efficient financial system, on a regional scale, are financial institutions, financial markets, financial instruments and financial regulators.
Financial institutions, otherwise known as financial intermediaries, are establishments that conduct a variety of financial services to their customers, being individuals, businesses and/or governments. The main role of financial institutions in the financial system is to act as the intermediary between borrows and savers to channel funds from savers to borrowers. Broadly speaking, there are two types of financial institutions; depository institutions and non-dep...

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