FINANCIAL EDUCATIONAL ENLIGHTENMENT

Firstly let's know the meaning of finance , it mean

" study of money " relating to Capital ,Lendings,

Borrowings, Investments, Earnings,Savings, Management, and So on many  other money related things.

Money refer to assets which have value  and generally accepted as medium of exchange

And the meaning of educational enlightenment is a process of learning or teaching a great  amount of knowledge.

 Systems  are generally defined as inter related (or) / and inter Connected activities.

Financial educational enlightenment means the process of "knowing / learning how" the Financial systems are evolved.

Generally Financial systems are evolved based on Market based system or Bank based system,

Sometimes it may be both a Market based and Bank based system.

In the case of the Indian Financial system ,it is evolved based on both market and bank based systems.

Whereas USA & UK Financial systems evolved based on Market based systems.

BUT JAPAN & GERMANY Financial systems evolved based on Bank based systems.

Like so many other countries, financial systems are evolved based on Market based systems or / and Bank based systems.

In Market Based Systems majority of  the people invest their Money ( capital money or /& earned money or/&  saved money or/& borrowed money) in market' s (  capital markets -Primary markets or/& secondary market's or/& Money Markets) through financial instruments such as equity shares , preference shares , debenture ,bonds, government bonds ,t- bills , and so on other type of  financial instruments.

In Market  Based systems,  Most of time's Market decides the rate of returns on  equity,preference shares and interest rates on debentures,bonds ,bills ,and so on ...

Some times  ,some industries sectors or some companies outperforms or beats  the market rate of return and set's benchmark returns for industries  or companies (In Financial terms it is called as ALPHA RETURNS).

Generally Market means where buying & selling take place.

Here Market means where people buy & sell their invested financial instruments according to Demand & Supply of their financial instruments

Generally well performed companies financial instruments have more demand relating to their quantity of supply of their financial instruments in primary/ secondary market.

In case of Indian Financial instruments like equity shares, preference shares, debentures bonds , the market place is recognised stock exchanges like BSE ,(Bombay stock exchange),NSE(National stock exchange) ,IFC (international financial centres) and some other recognised stock exchanges.

Now we can discuss the other type of financial system that is the Bank Based System. In  case of a Bank based system the majority of the people  invest their money in banks as a saving amount in a savings bank account or/ & as a  fixed amount in fixed deposit accounts.

In a Bank based system, Banks decide the rate of interest on saving amounts and fixed deposit amounts as per the norms of central banks of their respective countries.

In case of India it is RBI( Reserve Bank Of INDIA) who regulates the interest rates between RBI and other banks and also regulates the interest rates between banks their customers.

Whereas in the case of USA& UK  the central banks are  Federal Bank and Bank of England respectively.

For Analysis purpose only ,

 If we compare the Market based financial system and Bank based financial to decide which one is better , it's based on the peoples of   the Countries governing constitutions,  financial education of the peoples, economic , political & social conditions of the countries and some  other countries related factors affecting the financial systems.

If we analysis the evolution of Indian financial system , it's Modern (present)evolution started in the year 1947 month of August 15 th day getting independence from British ruled governance,that is after getting independence,

India adopted a democracy as their governing constitution ,but at that time  there is no  free market, most of  the market is controlled by either government or less number of private people because of India adopted socialism police's ,that is most of the market is controlled by government,At that time RBI role in Indian financial system is increased even though it's existence was there before independence.

So in the early days of independent India ,the Indian Financial system adopted a bank based system and the role of the central bank was increased.

After that , In the mid year's of 1980 's in the Indian financial system ,a market based financial system was started, with that few  private participation was started.

 With the introduction of

 LPG(Liberalisation,Privatisation,Globalisation) policy by the government of India in the year 1991 ,the Indian  market was opened to Global, with that in the Indian financial system the market based financial system was increased.

From that  Indian market based financial system played a more important role in Indian financial than Bank based Financial system  in India and it's continued to at present and in future also market based Financial system plays  crucial role In the evolution of Indian financial system and in India's  growth & development .

Whereas in case of  case of USA , their financial system has evolved as  a Market based financial  system due to their governing factors like democracy where they encouraged free market that is federal (USA) government adopted capitalism (free market) policies from the beginning of their independence and the peoples  financial education levels and their people trust on the free market .

Socio -Economic, Political factors of their country and some other favourable conditions made the USA financial system as a  Market Based.

In conclusion of the above discussion of evolution of  financial systems ,

Financial systems evolution is a continuous process. It keeps on evolving ,so keep on  updating to it.

I conclude by saying  that in the future cryptos  based on block chain technology may take part in financial systems of countries.