The financial system plays a crucial role in the economic development of a country. Financial systems fund industries and businesses. This leads to an enhancement in employment. In turn, it increases domestic trade and economic activity. Financial intermediaries help improve investment efficiency, leading to higher economic development.
The financial system balances economic growth
Economic progress needs balanced growth. One can attain this by propelling development in all sectors, concurrently. The financial system helps assign savings to investment avenues. It helps mobilize savings. Financial systems make better use of the funds by permitting investments in numerous sectors of the economy. This can lead to the beneficial use of money by allocating it across sectors in such a way that there is a balanced development in industries, agriculture and service sector.