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    How Financial Institution Promote Economic Efficiency: Aireyca Glenn Lanaban Debbie Grace Linaza

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    Debbie Grace Latiban Linaza
    Financial institutions like banks promote economic efficiency by transferring funds from those with surplus to those with a shortage, helping the accumulation of capital and production. They examine how banking sector development impacts GDP through lending, interest rates, and savings. A healthy economy requires a financial system that moves savings to productive investments according to theories. Financial markets and institutions efficiently direct savings and investment, suiting borrower and lender needs.

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    How Financial Institution Promote Economic Efficiency: Aireyca Glenn Lanaban Debbie Grace Linaza

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    Debbie Grace Latiban Linaza
    16 views7 pages
    Financial institutions like banks promote economic efficiency by transferring funds from those with surplus to those with a shortage, helping the accumulation of capital and production. They examine how banking sector development impacts GDP through lending, interest rates, and savings. A healthy economy requires a financial system that moves savings to productive investments according to theories. Financial markets and institutions efficiently direct savings and investment, suiting borrower and lender needs.

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    Financial institutions like banks promote economic efficiency by transferring funds from those with surplus to those with a shortage, helping the accumulation of capital and production. They examine how banking sector development impacts GDP through lending, interest rates, and savings. A healthy economy requires a financial system that moves savings to productive investments according to theories. Financial markets and institutions efficiently direct savings and investment, suiting borrower and lender needs.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    16 views7 pages

    How Financial Institution Promote Economic Efficiency: Aireyca Glenn Lanaban Debbie Grace Linaza

    Uploaded by

    Debbie Grace Latiban Linaza
    Financial institutions like banks promote economic efficiency by transferring funds from those with surplus to those with a shortage, helping the accumulation of capital and production. They examine how banking sector development impacts GDP through lending, interest rates, and savings. A healthy economy requires a financial system that moves savings to productive investments according to theories. Financial markets and institutions efficiently direct savings and investment, suiting borrower and lender needs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 7

    HOW FINANCIAL INSTITUTION PROMOTE

    ECONOMIC EFFICIENCY

    Aireyca Glenn Lanaban


    Debbie Grace Linaza
    Establishment of Relationship

    Financial institutions like banks play a vital role in economic


    growth. It examines the literature on banking sector development,
    assessing the impact of stock liquidity, interest rates, lending, and
    savings on the GDP and the stimulation of economic growth. It
    also evaluates the importance of financial sector development by
    examining its impact on economic growth and investment, which
    is the main source of growth.
    • Financial institutions encompass a broad range of business
    operations within the financial services sector including banks,
    trust companies, insurance companies, brokerage firms, and
    investment dealers.
    • Economic efficiency implies an economic state in which every
    resource is optimally allocated to serve each individual or entity in
    the best way while minimizing waste and inefficiency.
    • Financial market in which funds are transferred from people who
    have a surplus of available funds to people who have shortage of
    funds.
    Theories
    According to Mishkin (2016) A healthy and vibrant economy
    requires a financial system that moves funds from people who
    save to people who have productive investment opportunities.
    According Levine (2004) Financial markets help to efficiently
    direct the flow of savings and investment in the economy in
    ways that facilitate the accumulation of capital and the
    production of goods and services. The combination of well-
    developed financial markets and institutions, as well as a
    diverse array of financial products and instruments, suits the
    needs of borrowers and lenders and therefore the overall
    economy.
    Point of view
    • The economic development of any country depends on
    the growth of the business sector. The well developed
    financial system helps the business to achieve growth by
    making funds available to them. For which, the
    government has established financial institutions all over
    the country to provide finance to businesses.
    conclusion
    • Financial markets help to efficiently direct the flow of
    savings and investment in the economy in ways that
    facilitate the accumulation of capital and the production of
    goods and services. The combination of well-developed
    financial markets and institutions, as well as a diverse
    array of financial products and instruments, suits the
    needs of borrowers and lenders and therefore the overall
    economy.
    Sources:
    www.investopedia.com
    Mishkin, F., Eakins, S.(2016).Financial Market and Institutions
    Ninth edition
    Levine, Ross. 2004. “Finance and Growth: Theory and Evidence.”
    NBER Working Paper No. 10766, September 2004

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