1 Overview of Securities Domain

The role of the financial system is classified into the following:

• Savings Function- Mobilize savings in a way to provide a potentially profitable and low-risk outlet.
• Policy Function- Through the policy function, the government ensures a smooth flow of funds from savings into investments to stabilize the economy.
• Credit Function- After mobilizing the savings and laying down the necessary policies for the transfer of these funds, the credit function of the financial system will then ensure that these savings will transform into the necessary credit for investment and spending purposes.

The financial system evolved due to certain complexities associated with performing these functions.

• Generally, the requirements of the borrowers do not match that of the savers. Savers are concerned about the safety of funds, return, and liquidity, borrowers are concerned about the terms of the funds borrowed, the cost of funds, and the ease associated with borrowing funds.
• The return-risk profile expectations of both borrowers and lenders/savers differ.

This topic contains the following sub-topics:

• Financial market
  This topic describes the types of financial market and its characteristics.