Share
Explore BrainMass

Explain roles of financial institutions in global economy

Explain the roles of financial institutions in the global economy.

Discuss how the financial services industry is likely to change over the next decade.

Discuss how these changes might impact stakeholder relationships your organization has with financial institutions.

Solution Preview

Explain the roles of financial institutions in the global economy.

Financial institutions such as banks play an increasingly important role in today's global economy which is observing explosive growth in international trade and globalization, increasing number of companies going global, new international treaties and agreements, increasing opportunities in obtaining comparative advantage and other emerging trend such as outsourcing.

Financial institutions have an important role to play in helping your economies realize their full potential. Banking systems fulfill essential functions in intermediating between savers and investors, financing private sector trade and investment, and helping to ensure that the economy's financial resources are allocated efficiently. Well-functioning banking systems also increase the effectiveness of macroeconomic policy by providing a channel for monetary policy signals. (source: http://www.imf.org/external/np/sec/mds/1996/mds9608.htm )

Financial institutions are critical to a smooth functioning economy. Firstly, financial institutions (but more precisely deposit-taking institutions (DTIs), credit-card providers and debit-card providers) process payments and settlements, without which the undertaking of commercial transactions would be extremely difficult. Secondly, financial institutions act as intermediaries channeling funds from ...

Solution Summary

Explain the roles of financial institutions in the global economy.

$2.19