Nigeria Financial System SS3 Financial Accounting Lesson Note

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

1. Define financial system
2. List the components of financial system
3. State the functions of financial system
4. State the features of money market

INSTRUCTIONAL TECHNIQUES: 

• Identification, 
• explanation, 
• questions and answers, 
• demonstration, 
• videos from source

INSTRUCTIONAL MATERIALS: 

• Videos, 
• loud speaker, 
• textbook, 
• pictures

NOTE

FINANCIAL SYSTEM

Financial system can be defined as a system that allows the exchange of funds between financial market participants such as lenders, investors and borrowers.

 COMPONENTS OF FINANCIAL SYSTEM

The following are components of the financial system:

1. Financial institution: they bring firms, investors, and borrowers together.
2. Financial market.
3. Financial instruments.
4. Financial services.

 FUNCTIONS OF FINANCIAL SYSTEM

1. Capital Formation: The financial system helps to mobilize savings which leads to capital formation. These are made available through banks, households, and different financial institutions.
2. Pooling of Funds: in a financial system, the savings of people are transferred from households to business organizations. With these, production increases, and better goods are manufactured, which increases the standard of living of people.
3. Facilitates Payment: the financial system offers convenient modes of payment for goods and services. Payment options like credit cards, debit cards, cheques, etc. facilitate quick and easy transactions.
4. Provides Liquidity: liquidity means the ability to convert into cash. The financial market provides the investor the opportunity to liquidate their investments, which are in instruments like shares, debentures, bonds, etc.

 MONEY MARKET

Money market deals in short-term loans, generally for a period of less than or equal to one year.

 FUNCTIONS OF THE MONEY MARKET

1. To maintain a monetary balance between demand and supply of short-term monetary transactions.
2. It makes funds available to many units or entities engaged in diversified fields of activities be it agriculture, industry, trade, commerce, or any other business.
3. Providing funds to developing sectors it helps in the growth of the economy.
4. It provides discounting of bills of exchange which facilitates the growth of trade.

EVALUATION: 

1. What is the financial system?

1. Mention 4 components of the financial system.
2. State 3 functions of the financial system.
3. State 3 features of the money market.
4. State 3 functions of the money market.
5. State four functions of the capital market.

CONCLUSION: The teacher commends the students positively