Are weaknesses of financial markets a problem?
Problem:
a. Potential entrepreneurs require funds to finance new projects. Financial institutions, as like banks, are middle men who channel funds through savers to borrowers. Feeble financial markets mean entrepreneurs have limited access to savings and therefore cannot finance investment which increases productive capacity and thus facilitate growth.
b. The poor in specific lack access to traditional formal financial institutions as like banks and that cannot elevate loans for small family businesses.
Implications of financial markets a problem: governments and NGOs to promote microfinance, particularly in the poorest rural areas.