Open Access

Nelson Jinwen Efema

• This Thesis is aimed at showing the extent to which the efficient functioning of a country’s financial system is important for the development of its economy. One of the main determinants of economic development is economic growth. The research focuses on the functions of the main actors of the financial system, and how these functions impact on the GDP which in turn impacts on economic growth. Data from Books, Articles, and the Internet which show historical evidence of a positive correlation that exists between “the development and stability of a country’s financial system” and “the development of its economy” has been gathered to come up with an answer to this research question. The German economy is used as a case study to establish this evidence. In the course of this research, data showing the development of the German financial markets and Banking sector from the period - pre and post 2008 financial crisis was gathered. As well, data showing the growth of its GDP through the same time span was gathered. Following these data showing evidence of a positive correlation between the state of Germany’s Financial System and the state of its economy, it can be concluded that the efficient functioning of a country’s Financial System is to a greater extent, very important for the development of its Economy.