Financial System

Xingyun Peng

Chapter 2 in Financial Theory:Perspectives from China, 2015, pp 23-48 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Finance has been the core of the modern market economy, and a sound financial system is essential to the normal economic operation of a country. It is fair to say that if the financial system catches a cold, the economic activities of corporations and individuals will suffer from a fever; if the financial system is crippled, corporate and individual economic activities are unlikely to leap forward. This chapter will introduce the rationale behind the operation of the financial system, and clarify why it plays such an important role in economy. Furthermore, this chapter will provide a brief introduction to the financial instruments necessary for normal operation of the financial system. Finally, this chapter will tell you about information asymmetry and its impacts and why it occurs in financial activities and help you understand the methods of addressing information asymmetry in financial activities.

Keywords: Monetary Economics; Financial Markets; Monetary Policy; Financial System; Financial Development (search for similar items in EconPapers)
Date: 2015
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