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What is the Importance of the Financial System?

What is the importance of the financial system

Financial management consists of managing the resources that are held in a company to ensure that they will be sufficient to cover the expenses for it to work. In a company, this responsibility is held by only one person: the financial manager like Sean St John. In this way you can keep an adequate and orderly control of the income and expenses of the company.

In addition to the technical and financial knowledge that you must have to perform your position, the CFO like Sean St John Toronto has to manage other skills, such as communicative and social skills. Team management is an inherent quality of all departmental leaders. For this reason, it is no longer essential that they handle accounting, but that they have to act as a link between the members of their team.

 

How to have good financial system?

The fact of having a healthy financial system promotes the economic development of a country because it allows the investment of capital towards productive activities, such as construction, industry, technology and the expansion of markets. That is, the financial system contributes to the progress of a society, offering solutions to meet the needs of housing, study, and work, among others.

In the world of finance we also understand it as that which is lost by giving up consumption or an investment to use the resources in another project.

Therefore, there are establishments such as banks, financial corporations and financing companies. All with objectives and functions that identify different markets and different needs. The products and services offered by the financial system directly affect the lives of all the agents that participate in it, which forces the State to conduct surveillance through rules and regulations, giving confidence to society and stability to the economy in general.

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The financial system is essential in the development of the modern economy:

The importance of the financial system can also be shown with aspects related to daily life, such as the demand for money or the possession of assets.

By offering attractive returns, liquidity and reductions in risk, savings are stimulated and it is also possible to evaluate investment options or access to credits that are reflected in the efficient use of resources.

This implies that each product and service offered by financial institutions manage to adequately satisfy users. The possibility of carrying out transactions or payments quickly and efficiently without risking greater risks, also allows people to find a safe place to save their savings and obtain additional profitability.

The sector also has a transactional function, since it facilitates the payment of goods and services and in this way, trade and exchange between individuals, companies and countries. By allowing the use of technology and different means of payment with wide acceptance reduces transaction costs. The banking entities are in charge of providing the liquidity that the economy needs to continue with its growth.

The more robust and balanced the financial system is, the more it will contribute to the development and growth of both society and the country.

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