Financial systems refer to the structures and processes that facilitate the flow of funds within an economy. They encompass various institutions, instruments, and markets that enable individuals and businesses to manage their financial resources effectively. Key components include banks, stock exchanges, and regulatory bodies that ensure stability and transparency in financial transactions. These systems play a crucial role in economic development by providing access to capital, enabling investment, and fostering innovation. By connecting savers and borrowers, financial systems help allocate resources efficiently, ultimately contributing to growth and prosperity in society. Understanding these systems is essential for making informed financial decisions.