why is the financial system important 
financial systems are critical as they are a foundation for most economic activity individuals and businesses alike rely on financial systems to borrow and lend money buy and sell assets and make investments with the aim of earning financial yields financial systems link all the bodies participants and practices that make such interactions possible the bottom linea financial system refers to all the institutions that facilitate the exchange of funds throughout an economy this includes lenders like banks and credit unions marketplaces like the stock exchange government agencies like the federal reserve and even international institutions like the world bank it is within the financial system that all interactions borrowing lending investing financing can be conducted 