Overview of the Financial System

Suppose you want to start a business manufacturing a household cleaning robot, but you have no funds. At the same time, Walter has money he wishes to invest for his retirement. If the two of you could get together, perhaps both of your needs can be met. But how does that happen?

As simple as this example is, it highlights the importance of financial markets and financial intermediaries in our economy. We need to acquire an understanding of their general structure and operation before we can appreciate their role in our economy.