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Lesson 1, Topic 1
In Progress

Characteristics of Well-functioning Financial System

  1. Efficiency: Transactions within the financial system are conducted quickly, smoothly, and at low transaction costs.
  2. Liquidity: Markets for various financial instruments are deep and liquid, allowing investors to buy or sell assets with minimal impact on prices.
  3. Information Transparency: There is a high degree of transparency and disclosure in financial markets.
  4. Risk Diversification and Management: The financial system provides mechanisms for diversifying and managing risks.
  5. Intermediation: Financial intermediaries, such as banks and investment firms, play a critical role in connecting savers with borrowers. They facilitate the flow of funds in the economy and provide valuable financial services.
  6. Innovation and Technological Integration: The financial system embraces technological advancements and innovation to enhance efficiency, security, and accessibility.

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