The Six Core Functions Performed by the Financial System Essay

The Six Core Functions Performed by the Financial System - Essay ExampleThe set of institutional arrangements for accomplishing this task is collectively known as the payments establishment. Banks and other depository financial intermediaries fulfill this function thru wire transfers, checking accounts, and credit cards. Function 2. Pooling Resources and Subdividing SharesThe mechanism for the pooling of funds in a financial system is do so that it could undertake large-scale indivisible enterprise or for the subdividing of shares to form larger amounts of capital. In modern economies, the minimum investment required to start or maintain a business is often beyond the regular means of an individual or even several individuals. From the perspective of firms raising capital, the financial system provides a variety of mechanisms (such as security markets and financial intermediaries) through which individual households can pool their money to form larger amounts of capital.An interest ing function of a financial system is its ability to transfer resources across time and space. Serving this function are intermediaries like banks involved in financing corporate investments and housing, indemnification companies and pension funds in financing corporate investments and paying retirement annuities, and mutual funds.A well-functionin