Finance Banking

6 Important Roles Of Finance And Banking In Global Economy

Published at 01/23/2012 19:48:58


Every country has the finance and banking system whose function is to strengthen the finances of a country. The more the banking system is in a state either local or foreign. Finance and banking services have an important role in the economy, which one of the characteristics of developed countries with an increasingly dominant role of a service sector, either finance or banking. Important condition for factor services may increasingly have a crucial role in economic development is to improve competitiveness, which today can said that the competition world has no boundaries.


1. System of banking became one turnover in a country's financial sector, where each bank has a relationship with one another. When the finance and banking system in a country is not working properly then there will be an unstable economic growth and failure to achieve economic growth of a country that affect the global economy. Financial and banking system so that each state is required to always stable in the sense of the word healthy, transparent and well managed.

2. Finance and banking systems that are unstable in one country can affect the stability of financial institutions that affect the global economy such as rising interest rates or currency exchange rate of a country to another. For example, the current declining Indian currency against the dollar, this affects the economic system in India. The chaos that occurred in India, especially the exchange rate of Indian currency against the dollar will continue to decline if no handler is fast in sector finance and banking. This may result in the dismissal of employees in various companies, inability to pay debts receivable due to the falling value of the currency exchange.


3. Finance and banking instability can lead to disruption of the activity of the funds needed for the real sector in a country. With the inhibition of the real sector can limit or stop the activity of the economy of a country that would give effect to the global economy, because today every state has a lot of dependency in activities such as import and export economy.

4. Finance and banking sector of a country is good and healthy to give opportunities to other countries to invest in a particular country, to increase the country's economy. With the entry of foreign investment in a country does not only affect the financial sector and banking sector but also labor, because there are a lot of investments and foreign companies established in a country is able to absorb labor.

5. The task of financial institutions is to regulate the monetary stability, but in fact, the world's finance and banking institutions can affect the global economy. It acts as borrower credit to other countries, or becomes a helper of a country's economy was in trouble, so the result is not only economic but also political influence of a country. The borrower has the freedom to make changes in regulations, which may affect the finance and banking sector in country borrowers.

6. Factor finance and banking is not only giving the negative side for the global economy, such as the existence of loans to countries that have economic difficulties, by providing low interest rates so as not to burden the state in order to re-build its economy. Not only assist in building the economy, but also helps in various sectors such as health, public services better, and is expected to reduce poverty. Economy of a country that relies on finance and banking sector for the better course will provide a positive influence on global economy.