ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The financial system, a network of savers, investors and financial institutions, works together to transfer savings to those that need it and that in turn helps the economy grow.

Detailed explanation-2: -Banks as Financial Intermediaries Banks act as financial intermediaries because they stand between savers and borrowers. Savers place deposits with banks, and then receive interest payments and withdraw money. Borrowers receive loans from banks and repay the loans with interest.

Detailed explanation-3: -The financial system works to transfer funds from savers to borrowers through the circular flow of funds. Savers can provide their funds directly to the borrower or indirectly through the many financial intermediaries in the economy. The borrowers then generate the financial assets, which return to the lender.

Detailed explanation-4: -Financial Market It acts as a bridge between savers and investors where funds are mobilized between them. Savers are those who have excess money to invest while investors require money to invest.