Ministry of higher and secondary special education of the republic of uzbekistan tashkent institute of finance

3. Making payments through the financial system

Answer: Functions of the financial system according to Zvi Bodie,

Robert Merton, and David Cleeton: transferring resources across in time and space using the financial system; providing ways to manage risk; providing methods for clearing and making settlements that facilitate trade; providing a mechanism for combining financial resources and sharing ownership in various
enterprises; supply of price information that allows you to coordinate a decentralized decision-making process in various sectors of the economy; providing ways to solve the incentive problem. The financial system provides ways of moving economic resources in time, from one geographical region to another, as well as from one branch of the economy to another. The financial system provides opportunities for risk management. Like the movement of money resources through the financial system, risks also move. There are intermediaries in the financial system, for example, insurance companies that specialize in activities related to the transfer of risk. They charge special insurance premiums from customers who want to lower their risks and pass them on to investors who, for a fee, agree to pay insurance claims and bear the risk. One of the most important functions of the financial system is to provide people and firms with effective ways to make payments in the process of acquiring goods and services. The financial system provides a mechanism for pooling funds to establish a large scale enterprise or to divide the capital of large enterprises into units among a large number of owners. The financial system provides pricing information that helps to coordinate among themselves the independent decisions made in various sectors of the economy. The financial system solves the psychological incentive problems that arise if one side of a financial
transaction possesses information that the other transaction partner does not have, or when one side is an agent making decisions for the other.

Example: I bought computer from China. Our neighbor used to buy and sell building materials, due to the pandemic they were not sold and price fell. My parents send money to me via bank. I sold shares of Artel for large sum of money. I received information about the prices of laptops for sale on Olx.uz.