Finance and Financial System Overview Research Paper

Functional Perspective

Though financial systems change over time, their functional perspectives do not. Operational financial systems are expected to be similar in all economies, hence, its necessitated reliability in the system. A functional perspective is mainly used in doing financial analysis in a financial system. It provides a foundation for referring to a country's financial system. The financial perspective also assists in evaluating the system actions. Using a financial perspective in activity levels leads to risk management and transfer of resources inter-temporally.

Financial Innovation and Market Rates

A financial innovation system is an integral part in analyzing financial systems. It is a scheme implicit in the state innovation systems. It mainly addresses the issues in business finance that are used in initializing the financing of technological and innovative developments. Financing policies and programs need to dig into dynamics of this system. The financial innovation systems strengthen capabilities of achieving developments (Wonglimpiyarat, 2011, pg 36). Financial system refers to market rates as the asset prices allocated to goods in a market. Agents of the assets optimize the rates by reflecting on the tendency of the demand chain of the asset in market (Rieger & Hens, 2010, pg 167).

Financial Intermediaries and Regulations

A financial intermediary is a depository institution that supplies checkable deposits to the national financial system.They consist of mutual savings and commercial banks, credit unions, savings, checking and loan associations. They mainly get their deposit from firms, governments and people (domestic and foreign). Other intermediaries are life and casualty institutions and money market mutual funds, among others. They subject, other fiscal matters to the financial system (Burton & Brown, 2009, pg 12).

Many of these financial intermediaries have failed the financial system leading to a recession of financial crisis. For this reason, regulations have been effectuated to increase completion, safety and competence in order to balance financial services. It is, therefore, vital to possess some knowledgeable piece of information about finance. This is essential in understanding how economies are ran, and to accentuate necessary financial measures that can assist in curbing financial crises that are affecting many nations globally.

References

Burton, M & Brown, B. (2009). The Financial System and the Economy: Principles of Money and Banking. New York: M.E Sharpe.

Deaves, R & Ackert, L. (2009). Behavioral Finance: Psychology, Decision-Making, and Markets. New York: Cengage Learning.

Houston, J. F & Brigham, E.F. (2009). Fundamentals of Financial Management. New York: Cengage Learning.

Rieger, M. O & Hens, T. (2010). Financial Economics. New York: Springer.….....