Consumer Essay Example | Topics and Well Written Essays - 500 words

Consumer - Essay ExampleThe financial system performs the overall function of moving money in the midst of deliverers and borrowers and this allows people to transfer their ability to use money to transform the world by time and space. (Shavinina 2003, p. 530) The financial system interacts with real economic activity through its various functions by which it facilitates economic exchange. What is the significance of this system for consumers, one may ask. The financial system plays an important role in mobilizing funds in such(prenominal) a way that they atomic number 18 transformed into assets that better meet the needs of individuals as investors and as consumers. A specific example is when financial intermediaries facilitate portfolio diversification. Here, resources are transferred across time and space, allowing investors and consumers to borrow against future income and meet current needs.Financial systems also have existing mechanisms that are pivotal in developing deter mine information. This information such as the appraisal of the value of companies allows investors to make informed decisions in regard to how they allocate their money. A market that is plagued by information imperfection will result to an imbalance in the quantity and quality of investment hurting an economys potential.In regard to financial institutions such as banks, they perform various functions within the financial system, including the use of technological infrastructure to profitably and reliably deliver services and so extend the institutional depose upon which the financial system depends. A particularly important role played by financial institution is how they ease the tension between a savers preference for liquidity and the entrepreneurs requirement for long-term financing. Because of this, wrote Nnadozie, at any given level of saving, an efficient financial system will allow for a higher level of investment by maximizing the proportion of saving that actually fina nces investment. (p.