Using an essay style format, discuss why might banks be considered as

Using an style format, discuss why might banks be considered as the key players in the fiscal clay - Essay ExampleAll of these parts are closes dependent on each other. A good financial system makes sure that all these parts function together to make sure that the money is optimally channeled in an economy. If one part of the financial system is in conflict with the other, or if there is a distortion between the motives of the two parts of a financial system, then there are chances that the financial system will collapse. This is very dangerous for the entire economy, because when one part of financial system collapses, other parts also face the domino heart and soul causing the economy to face serious recession and plummeting demand. Hence, it is imperative for an economy to have a stable financial system if it is to work well. (Mishkin)Financial markets make it possible for people to trade securities. It is a good way of raising capital, transferring risk, liquidity maintenance and trading foreign exchange. The financial markets play an important percentage in instilling level of confidence in the investors. They know that they can invest now and liquidate in future when they need funds and appropriate them earn interest on their money. Examples of Financial Markets can be Stock Markets, Money Markets, Forex Markets and IPOs (Lipsey and Chrystal). A good financial system usually contains financial markets as a platform that allows the trading of financial securities and instruments. Similarly, Financial Institutions consist of those organizations that allow channeling of funds and create credit in the economy. In case these are missing in a financial system, then the economy is deprived of multiplier effect and can face serious levels of unemployment and lack of investment motives. Examples of Financial Markets entangle Banks, Building Societies, Leasing Companies etc. Financial Instruments are securities that are traded in the Financial Markets. Thes e include bonds, stock, money market securities and derivatives. These are again very important