Financial

System
Team Members : Jenish Shrestha, Ajina Tamang, Jyotika Khatri, Date : 2024/12/17
Prakriti Sharma, Maya Chaudhary, Krishma Ghimire
 Contents
Table Of
Financial
System

1. 2.
Introduction Functions

3. 4.
Components Finacial intermedia's,
Types and Financial
Assets

5. 6.
Roles Conclusion
Financial
System

Introduction
A financial system is like the backbone of an economy,
connecting various participants who need to manage
money, investments, and credit. It is a wide network that
includes institutions, markets, instruments, and regulatory
bodies, all working together to facilitate the flow of funds.
Functions of
Financial Mobilizes Allocates
Savings Capital
System
Encourages individuals and Direct funds to the most efficient
2025 businesses to save. and profitable uses.

Collects and channels saving into Introduces are allocated to high

investments. potential sectors.
Functions of
Financial Manages Provides
Risks Liquidity
System
Helps businesses and individuals Enables quick buying or selling of
protect again uncertainties. assets without major price
impact.
Functions of
Financial Facilitates Stabalize the
Payments Economy
System
Simplifies transaction through Regulates money supply and
payment systems [banks, online interest rates.
platforms].
Functions of
Financial Promotes Saving Discover
and Investments Prices
System
Encourages individuals to see for
future growth. Financial markets determine
asset prices based on supply and
Convert saving into productive demand.
investments, boosting economic
growth.
Components of
Financial Financial Financial
Institutions Instrunments
System
Group of business firms including Tools for investment and risk
2025 depository and non depository sharing.
institutions, finance company,
insurance company, Employee For example, stocks, bonds,
Provident fund etc. loans, derivatives(Future
Options).
Components of
Financial Rules and Financial
Regulations Market
System
Governance and supervises Platforms of facility buying and
2025 activities. Control by central selling of financial instruments.
banks, Ministry of Finance, Types: Money market, capital
Securities Regulators, insurance market, Forex market, and
regulators etc. derivatives market.
Components of
Financial Payment Financial
mechanisms Intermediaries
System
Facilitates money transfer via Entities/Organization Which
2025 tools like electronic banking and connects savers and borrowers.
mobile platforms
For eg: Banks, mutual funds,
brokers
Financial
Types of
Market
Primary Market

Advantages Disadvantag
es
1. Capital
Formation 1. Risk
2.Liquidity 2.Inefficienc
3.Economic Growth y
Financial
Types of
Market
Secondary Market

Advantages Disadvantages

1. Risk Management 1. Transaction Cost

2.Economy 2.Speculation
efficiency
3.Price Discovery
Financial Money Capital
Types of
Market Market
Market
It is a financial market where Our capital market will long term
participants can land and borrow debt or securities are bought and
2025 short term securities with an
average maturities of one or less
sold is capital market.
year.
Financial
Types of
Market
Foreign Exchange Capital Market

2025

Derivative
Financial
Market
 Financial Intermediaries
Fi n a n c i a l i n t e rm e d i a r i e s a re i n s t i t u t i o n t h a t a c t s a s a
m i d d l e m a n b e t w e e n s a v e r s a n d b o rro w e r s f u l l y s t o p p e d
t h e y c o l l e c t s a v i n g s f ro m i n d i v i d u a l a n d b u s i n e s s e s a n d
then land or invest those funds to others who need capital.
T h i s p ro c e s s h e l p s t o f a c i l i t a t e e c o n o m i c g ro w t h b y
e n s u r i n g t h a t f u n d s a re c o l l e c t e d e ffi c i e n t l y.
Intermediaries
Depository
Non - Depository
financial
Financial
financial
Types of

intermediaries
intermediaries

These are the most common type These are finances institutions
of financial intermediary. it that do not accept deposit from
accepts deposits from customers
2025 and then lend those funds to
general public. They primarily
generate funds through issuing
borrowers. it also provides securities or borrowing from other
various types of other services. financial institutions.

Eg: Banks Credit Unions Etc. Eg: Insurance companies, pens

and funds.
Intermediaries Credit
Financial
Banks
Types of
Unions

These are the most common type

of financial intermediary. it These are similar to banks, but
accepts deposits from customers they are owned by their
2025 and then lend those funds to members. Credit unions typically
borrowers. it also provides offer lower interest rate rate on
various types of other services. loans and higher on saving
accounts.
Intermediaries Insurance Investment
Financial
Types of
Companies Banks

This company's sales insurance These banks help companies

policies, which provide financial rates capital by issuing stocks
2025 protection against loss. Insurance
company collect premiums from
and bonds. They also provide a
variety of other services such as
policy holders and then in best mergers and acquisitions.
those funds
Intermediaries Mutual Pension
Financial
Types of
Funds Funds

This fonts pool money from many These funds invest money that is
investors and then invest it in a set aside for retirement. Funds
2025 diversified portfolio of stocks,
bonds or other securities
are typically minus by large
institutions, such as corporations
or government agencies.
Intermediaries
Functions of
Financial

1.Mobilizing Savings
2.Diversification
3.Reducing Transaction
Costs
Financial System
Roles of

2025 Facilitation of
intermediation
investment
Financial System Act as
Financial systems enable intermediaries between savers
individual, business and and borrowers, channeling funds
government to access the capital from those who have excess
needed for investment for funds to those who need funds
investing in productive activities.
Financial System
Roles of

2025 Capital
Facilitation of
formation
payments

Financial system play a crucial

role in capture formation within Financial systems enable the
an economic. By mobilizing smooth and secure transfer of
savings, facilitating investments funds between individual,
and promoting efficient allocation businesses and institutions
of capital.
 Financial Assets

A fi n a n c i a l a s s e t i s a n a s s e t t h a t E a c h g a s o r c a n b e
converted into cash, Such as stocks, bonds, or bank
d e p o s i t s . T h e s e a s s e t s re p re s e n t a c l a i m t o f u t u re c a s h
fl o w s o r o w n e r s h i p i n a n e n t i t y.
Classification of
financial assets

Primary financial
2025 assets Secondary financial
assets

Primary financial assets are those

that are directly used by the Secondary financial assets refers
entity like stocks and bonds sold to those that are traded in the
in the primary market. secondary market. This includes
buying and selling stocks or
When you buy these assets bonds that have already been
directly from the issuer, you are issued.
acquiring primary financial assets
Classification of
financial assets

Marketable financial
2025 assets Non marketable
financial assets

Market of all financial assets are Non marketable financial assets

those that can be easily bought are not provided on public
or sold in the financial markets, exchanges and cannot be easily
such as stocks and bonds.. They sold.
have high liquidity, meaning they Examples include private equity
can be quickly converted into investment, certain type of real
cash. estate and loans.
Classification of
financial assets

2025 Cash Debt

This refers to financial

This includes physical currency
instruments like bonds or loans.
and money in bank accounts. It is
When you buy a bond, you are
the most liquid asset, easily
essentially lending money to the
accessible for transactions
issuer in the exchange for.
Payments and the return of the
principal at maturity
Classification of
financial assets

2025 Debt
Stocks

Stocks represent ownership in a

company. When you buy a series
of stock, you become a part of
owner and may receive dividends
as well as capital gains if the
stock price increases.
Than
k You
For Your Attention!