A financial system is a set of institutional arrangements through which financial surpluses are mobilized from the units generating surplus income and transferring them to the others, who are in need of them.

It may be noted that every modern economy is based on a sound financial system. Financial

System helps in movement of funds from the surplus hands to the hands requiring them and as a result surplus funds come into the main stream of production and hence develop the economy.

Components of Financial System

Financial System comprises of the following:

Financial Markets,

Financial Institutions,Intermediaries,

Financial Products