CHAPTER 1

INTRODUCTION
FEW QUESTIONS

1. HOW DOES AN ECONOMY GROW?

2. WHAT IS THE ROLE OF FINANCIAL SYSTEM?
3. WHAT IS A FINANCIAL SYSTEM?
4. WHAT IS THE DESIGN OF FINANCIAL SYSTEM?
5. WHAT ARE THE KEY ELEMENTS OF A WELL
FUNCTIONING FINANCIAL SYSTEM?
6. WHAT ARE THE MAJOR CONSTITUENTS OF
FINANCIAL SYSTEM?
7. WHAT ARE THE MAJOR FUNCTIONS OF A
FINANCIAL SYSTEM?
8. DO WE HAVE A FINANCIAL SYSTEM IN INDIA?
FEW QUESTIONS CONTDD..
9. IF YES, WHAT DOES IT CONSISTS OF?
10. IS INDIAN FINANCIAL SYSTEM AFFECTED
BY INTERNATIONAL FACTORS?
11. IF ANSWER TO Q 10 IS YES, LIST DOWN THE
INTERNATIONAL FACTORS AFFECTING
INDIAN FINANCIAL SYSTEM?
HOW DOES AN ECONOMY GROW?
- AN ECONOMY GROWS WHEN THERE IS SMOOTH
FLOW OF FUNDS BETWEEN THOSE WHO SAVE A
PART OF THEIR INCOME AND THOSE WHO INVEST
IN PRODUCTIVE ASSETS.
WHAT IS THE ROLE OF FINANCIAL SYSTEM?
FINANCIAL SYSTEM FACILITATES THE TRANSFER
AND ALLOCATION (FLOW) OF FUNDS EFFICIENTLY
AND EFFECTIVELY.
WHAT IS A FINANCIAL SYSTEM?
A FINANCIAL SYSTEM IS A COMPLX, WELL
INTEGRATED SET OF SUB-SYSTEMS OF FINANCIAL
INSTITUTIONS, MARKETS, INSTRUMENTS AND
SERVICES WHICH FACILITATES FLOW OF FUNDS.
WHAT IS THE DESIGN OF FINANCIAL SYSTEM?
A. BANK BASED
B. MARKET BASED

COUNTRIES HAVING BANK BASED FINANCIAL

SYSTEM INCLUDE GERMANY, JAPAN, ITALY,
FRANCE.
COUNTRIES HAVING MARKET BASED FINANCIAL
SYSTEM INCLUDE USA, UK, SINGAPORE,
HONGKONG.

IN WHICH CATEGORY DOES INDIA FALL??????

WHAT ARE THE KEY ELEMENTS OF A WELL
FUNCTIONING FINANCIAL SYSTEM?
A. STRONG LEGAL AND REGULATORY
ENVIRONMENT
B. STABLE MONEY
C. SOUND PUBLIC FINANCE AND PUBLIC DEBT
MANAGEMENT
D. A CENTRAL BANK
E. A SOUND BANKING SYSTEM
F. AN INFORMATION SYSTEM
G. WELL FUNCTIONING SECURITIES MARKET

DOES INDIA HAVE A WELL FUNCTIONING

FINANCIAL SYSTEM???
WHAT ARE THE MAJOR CONSTITUENTS OF FINANCIAL
SYSTEM?
A. FINANCIAL INSTITUTIONS
B. FINANCIAL MARKETS
C. FINANCIAL INSTRUMENTS
D. FINANCIAL SERVICES

DOES INDIA HAVE ALL THESE CONSTITUENTS

OF A FINANCIAL SYSTEM???
WHAT ARE THE MAJOR FUNCTIONS OF A FINANCIAL
SYSTEM?
A. MOBILIZE AND ALLOCATE SAVINGS
B. MONITOR CORPORATE PERFORMANCE
C. PROVIDE PAYMENT AND SETTLEMENT SYSTEM
D. RISK BEARING AND REDUCTION
E. DISSEMINATE PRICE RELATED INFORMATION
F. OFFER PORTFOLIO ADJUSTMENT FACILITY
G. LOWER THE COST OF TRANSACTION
H. PROMOTE THE PROCESS OF FINANCIAL
DEEPENING AND BROADING

HOW ABOVE FUNCTIONS CAN BE STUDIED WITH

REFERENCE TO INDIAN FINANCIAL SYSTEM???
DO WE HAVE A FINANCIAL SYSTEM IN INDIA?
????
IF YES, WHAT DOES IT CONSISTS OF?