Contribution of Finance Sector to boost economy

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The growth of different sectors in the economy is balanced through the financial system. The
financial system funds the sectors by providing funds for industrial, agriculture and services
sector.
The three major functions of financial system are:-
1)  Liquidity provision - Banks and financial services offer to buy and sell securities as per
     need and in large amounts to fill the usual and sudden requirements of stake holders.
2)  Credit provision - Govt. invests in infra - structure projects by correcting spending,
      and reducing the cycles of tax revenues. Individuals can purchase homes and business
      can invest more than the cash they have and other utilities without saving entire amount
      in advance. Banks and other financial services provide credit facilities  to the stake
      holders.
3)   Risk Management Service - Finance provides Risk management from risk of financial
      markets and commodity prices by pooling risks. Derivative transactions enable banks to
      provide Risk management. These are valuable services since they receive lot of risks
      due to excesses during financial crisis.
In addition to above, economy is boosted by Saving- Investment relationship. The investment
and production activities are the result of sufficient savings.
Also, boost of Capital markets is also due to business needs both - Fixed and Working capital.
Business raise shares and debentures for Fixed capital. Since these instruments provide minimal
risk, both Public and Private sector invests in these instruments. For Working capital, bills,
promissory notes, short term loans etc. provide finance since they are valid in money markets
that exists for this purpose.
Besides, Foreign exchange markets, Govt. securities ( issue of bonds, tax concessions, to cover budgetary gaps, along besides more employment prospects plays significant role to play as boost
in the economy.                     

                                                             - - - - - - - -

 Waiting for Readers' comments on my above note

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