Financial Systems
FINANCIAL SYSTEMS
A financial system is a set of complex and closely interconnected financial institutions, markets, instruments, services, practices and transactions. It consists of institutional units and markets that interact, typically in a complex manner, for the purpose moblising funds for investment and providing facilities, including payments systems, for the financing of commercial activity.
Financial systems are crucial to the allocation of resources in a modern economy. They channel household savings to the corporate sector and allocate investment funds among firms; they allow intertemporal smoothing of consumption by households and expenditures by firms and they enable households and firms to share risk. Thus it allows the transfer of money between savers/ investors and borrowers.
It is a collection of accounting processes and procedures that allow a business to keep accurate financial records, monitor accounts, prevent fraud and mistakes, catch any discrepancies and also to maintain accountability for expenditures and revenues and to control their finances to minimize waste and loss.
It is also an information system, comprised of one or more applications, that is used for any of the following; collecting, processing, maintaining, transmitting and reporting data about financial events; supporting financial planning or budgeting activities; accumulating and reporting cost information or supporting the preparation of financial statements.
Kenya’s financial market is classified into the following:-
1. Capital Market
2. Money Market
The financial market which makes up the financial system in Kenya is comprised of the following;
1. Banks and non-bank financial institutions
2. Insurance companies
3. Savings and Credit Co-operative societies
4. Co-operative societies
5. Agricultural Finance Co-operations
6. Foreign exchange bureaus
7. Hire-purchase companies
8. Retirement benefits/ Pension Industry
9. Investment advisory firms
10. Post
A financial system is a set of complex and closely interconnected financial institutions, markets, instruments, services, practices and transactions. It consists of institutional units and markets that interact, typically in a complex manner, for the purpose moblising funds for investment and providing facilities, including payments systems, for the financing of commercial activity.
Financial systems are crucial to the allocation of resources in a modern economy. They channel household savings to the corporate sector and allocate investment funds among firms; they allow intertemporal smoothing of consumption by households and expenditures by firms and they enable households and firms to share risk. Thus it allows the transfer of money between savers/ investors and borrowers.
It is a collection of accounting processes and procedures that allow a business to keep accurate financial records, monitor accounts, prevent fraud and mistakes, catch any discrepancies and also to maintain accountability for expenditures and revenues and to control their finances to minimize waste and loss.
It is also an information system, comprised of one or more applications, that is used for any of the following; collecting, processing, maintaining, transmitting and reporting data about financial events; supporting financial planning or budgeting activities; accumulating and reporting cost information or supporting the preparation of financial statements.
Kenya’s financial market is classified into the following:-
1. Capital Market
2. Money Market
The financial market which makes up the financial system in Kenya is comprised of the following;
1. Banks and non-bank financial institutions
2. Insurance companies
3. Savings and Credit Co-operative societies
4. Co-operative societies
5. Agricultural Finance Co-operations
6. Foreign exchange bureaus
7. Hire-purchase companies
8. Retirement benefits/ Pension Industry
9. Investment advisory firms
10. Post
References: 1. Economics, A Student’s Guide 5th edition by John Beardshaw, David Brewstar and Andrew Ross 2. Financial Stability Report 3. Kenya Government Medium Term Debt Strategy 4. IRA (2011), annual Report 2o11’, Insurance Regulatory Authority of Kenya 5. IMF (2012) World Economic Outlook, Update, January 2012.