Chapter 2: Introduction to financial systems Aims The aim of this chapter is to investigate financial systems from both a functional and a structural perspective. We set out a taxonomy of financial intermediaries, securities and financial markets, and give an overview of the peculiarities of national financial systems. Learning objectives By the end of this chapter, and having completed the essential readings and activities, you will be able to: • understand why financial systems exist (i.e the functions of financial systems) • outline the structure of financial systems (i.e describe the three main entities that compose financial systems: financial intermediaries, securities and financial markets) • describe which financial intermediaries operate in financial systems in the USA in particular and, more generally, around the world (e.g. depository institutions, contractual savings institutions and investment intermediaries) and explain their characteristics • explain which financial securities are traded on financial markets
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