ABSTRACT
The financial environment encompasses all types of financial institutions which manage the money supply of a country, which mobilise the savings accumulated within a country, which attract savings from abroad, and which offer the funds received to those requiring them for investment purposes. The financial environment of a country refers also to the prevailing attitudes of the population to financial instruments and financial institutions and within the financial sector to the rest of the economy. It must also be capable of mobilising domestic or foreign savings and of offering them to industrialists as working capital or for investment in fixed capital equipment. The chapter considers the proposition that industrialisation may be stimulated in a period of inflation. It is linked to the financial sector of the economy because inflation may occur as a result of, or be intensified by, the attitude of the banking system towards the creation of credit and thus to the expansion of the money supply.
