Financial System of Bangladesh: Basic Concept: Finance is the provision of fund from surplus economic units to deficit economic units. Two types of finance: direct and indirect. The main constituents of any financial system are financial institutions or financial intermediaries, financial instruments and financial markets.
Financial Institution: The up-to-date name of financial institution is financial intermediary since it encourages or remains between conclusive borrowers and lenders. It is by and large assembled under two primary heads: 1. Bank and 2. Non-Bank Financial Institution (NBFIs).
Financial Instrument: the evidences of financial claims of one party (holders) against another party (issuers). These are two types: primary or direct – claims against real sector units and secondary or indirect – claims against financial institution or financial intermediaries.
Financial Markets: is a place where financial instruments are bought and sold. These are money market (deals with short term financial instruments) and capital market (deals with long term financial instruments). Financial markets may also be divided into security and non-security markets.