A financial system is a network that facilitates the flow of money and resources in an economy. It includes various institutions, such as banks, investment firms, and insurance companies, which help individuals and businesses manage their finances. By providing services like loans, savings accounts, and investments, the financial system supports economic growth and stability. In addition to institutions, the financial system also involves markets where assets like stocks and bonds are bought and sold. These markets allow people to invest their money and earn returns. Overall, the financial system plays a crucial role in connecting savers and borrowers, driving economic activity and development.