what is a financial system 
a financial system is a set of institutions such as banks insurance companies and stock exchanges that permit the exchange of funds financial systems exist on firm regional and global levels borrowers lenders and investors exchange current funds to finance projects either for consumption or productive investments and to pursue a return on their financial assets the financial system also includes sets of rules and practices that borrowers and lenders use to decide which projects get financed who finances projects and the terms of financial deals 