savings and the economy

Saving is an important activity in every economy and it entails the ability of citizens or corporates to save their excess money with the banking system which can then pool those funds which can later be borrowed by investors at an interest hence earning an income. Savers can also benefit from that investment by earning an interest based on the investments made.Mutual Funds, Unit Trusts and Commercial Banks acts as the intermediaries or custodians of the funds and make loans which they can offer to the public, government institutions and companies. This will bring us to a new conception of financial markets entailing the platform where the trade of notes, stocks and bonds actually takes place. Different products can then be tailor made to suit the existing or future markets.These products are the ones which will give a clear distinction of the financial markets based on their tenure, interest rate and whether they are being traded for the first time or not. Financial assets can take the form of Treasury bonds, Treasury bills, bankers acceptances, negotiable certificates of deposit, commercial paper, REPO agreements and general loans. From these assets there can be derived other forms of tradable assets which are called financial derivatives for example forwards, futures, swaps and options. This information and all other kinds of information prevailling in the market need to be taken in to consideration for the best of decision making for example the government can cut income tax there by improving disposable incomes and savings, by borrowing from the financial institutions in form of bonds the government can also bring hope to the sector and improve efficience