Overview of Financial Systems

A set of flashcards summarizing vocabulary related to financial systems, their components, and functions.

Financial System

A network of institutions, markets, instruments, and services that facilitate the flow of funds between savers and borrowers.

Financial Assets

Contracts that represent a claim on the future income or assets of another entity.

Financial Intermediaries

Institutions that act as middlemen between savers and borrowers, channeling funds from those who have it to those who need it.

Liquidity Provision

The ability of financial institutions to ensure that individuals and businesses can easily access their funds when needed.

Risk Management

The practice of managing financial risks through instruments like insurance and derivatives.

Mobilization of Savings

Encouragement of individuals and businesses to save money and directing those savings toward productive investment.

Foreign Exchange Markets

The global market where currencies are traded.

Investment Banks

Financial institutions that focus on underwriting securities, mergers, and acquisitions advice.

Commercial Banks

Financial institutions that offer a wide range of services including deposits and loans to individuals and businesses.

Insurers

Companies that provide risk transfer and financial protection through insurance policies.

Mutual Funds

Investment programs funded by shareholders that trades in diversified holdings and is professionally managed.

Derivatives

Financial contracts whose value is derived from the value of an underlying asset.

Primary Market

The marketplace for the creation and sale of new stocks, bonds, and securities.

Secondary Market

The marketplace where existing stocks, bonds, and securities are bought and sold.

Payment Systems

Infrastructure for transferring funds between individuals, businesses, and financial institutions.