Definition and Functions of the Financial Sector The financial sector is the interaction of markets and all therein, within a regulatory framework. This interaction usually entails lending and borrowing both long and short term. This is accomplished through financial intermediaries (banks and other financial institutions) providing a link between households, firms and governments in transferring…
Tag: The Financial Sector
Money and Money Supply
Money and Money Supply Money is defined in economics as anything that is used or accepted as payment for goods and services. Throughout the years, several commodities have been used as money. Before the use of money, however, barter was used. Bartering is a system in which individuals directly exchange one good for another. This…
Central Bank
Central Bank The Central bank and other financial institutions play important roles in the financial sector. A central bank is a nation’s primary monetary authority. It wears the hats of, regulator (of commercial banks, building societies, merchant banks, financial houses and other financial institutions), lender of last resort (lends money to financial institutions, at higher…
Financial Institutions
Financial Institutions Below is a list of institutions of note and their roles: Commercial Banks: These are institutions whose main objective is to raise funds. They accomplish this by accepting deposits (they usually have a variety of deposit accounts), using these deposits to make consumer, business and mortgage loans and also buy government securities and…
Bonds and Securities
Bonds and Securities Types of bonds and securities in the money market include: Treasury bonds are long term debt obligations which have maturities of over 7 years and receive interest payments semi-annually. Corporate bonds are those issued by corporations and yield higher rates than municipal bonds. These bonds mature anywhere between 1 to 30 years,…