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Role of Financial Systems in Savings Mobilization

The document discusses the role of the financial system in mobilizing household savings through various contractual forms such as units, premiums, and pension funds. It highlights how the financial system connects savers and investors, facilitating investment and production activities while reducing finance risks. Additionally, it emphasizes the importance of banking habits in promoting savings and supporting investment decisions through project appraisal and execution.

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Aditya Adi Singh
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7 views1 page

Role of Financial Systems in Savings Mobilization

The document discusses the role of the financial system in mobilizing household savings through various contractual forms such as units, premiums, and pension funds. It highlights how the financial system connects savers and investors, facilitating investment and production activities while reducing finance risks. Additionally, it emphasizes the importance of banking habits in promoting savings and supporting investment decisions through project appraisal and execution.

Uploaded by

Aditya Adi Singh
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

savings in the household sector are mobilized

directly in the form of units, premium, provident


fund, and pension fund. These are the contractual
forms of savings. Financial actively deals with
the production, distribution & consumption of
goods and services. The financial system will
provide inputs to productive activity. Financial
sector provides inputs in the form of cash credit
& assets in financial for production activities.

The function of a financial system is to establish


a bridge between the savers and investors. It helps
in mobilization of savings to materialize
investment ideas into realities. It helps to
increase the output towards the existing
production frontier. The growth of the banking
habit helps to activate saving and undertake fresh
saving. The financial system encourages
investment activity by reducing the cost of
finance risk. It helps to make investment
decisions regarding projects by sponsoring,
encouraging, export project appraisal, feasibility
studies, monitoring & execution of the projects.

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