Financial sector
- Created by: Michael.OC
- Created on: 30-12-20 13:31
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- Financial sector
- Role of the financial sector
- Needed to raise finance for investment and development projects
- Provides the infrastructure necessary for saving
- Allows for lending to occur
- The Harrod-Domar economic growth model
- Increased savings
- Increase investment
- Increased Capital Stock
- Increased output
- Increased incomes
- Increased output
- Increased Capital Stock
- Increased incomes
- Increase investment
- Rate of growth of GDP = Savings ratio / Capital ratio
- Limitations:
- Many countries have low marginal propensity to save - a domestic saving gap can then occur
- Without a sound financial system it may be difficult for consumers to save
- Increased savings
- Microfinance
- Poverty reduction
- Sustainable finance
- Gender empowerment
- Sustainable finance
- Debt from sub-prime lending charged at high interest
- Funding for skills can have a bigger impact in the long run
- Credit is often used for consumption instead
- Funding for skills can have a bigger impact in the long run
- Poverty reduction
- Role of the financial sector
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