A successful outcome is not just the growth of productivity but also confirming that the structure of growth is comprehensive, and also helps boost the value of life by contributing to the improvement of human. financial policy Is one of the national development techniques made by the government, these policies correlate to and take account of the distinct features and roles of individual sectors that must adapt to achieve the goals of both growth and human development.
The financial sector can serve as an important motivation for growth by aggregating the savings of different agencies of ranging economic stability and distributing it between sectors demanding funds. Given the cumulative output that can be accomplished from a group of investments, growth depends on the share of national income dedicated to investment. Many factors induce the incentives to invest, However, a considerable share of those intentions may remain unrealized, even when it's potentially attainable, due to a lack of access to the Capital needed to finance such investments.
Financial policies play an integral role in securing the durability and advancement of an economy, the branches of government both the executive and legislative come together to determine policy and use it to influence the economy by modifying revenue and spending levels, this is done for the effective management of financial resources. These policies can cover different areas which are taxation, budgeting, spending, borrowing, etc. The objective policy is generally to improve economic growth and financial sustainability. Governments and businesses owner often use finances to set out goals for themselves in knowing how to manage risks and divide resources in a way that will be of good advantage to the company, and its stakeholders This policy also ensures the improvement of finance with a future return to key sectors, projects, and agents from a development point of view.
One of the ways of implementing a financial policy is through tax. Most times we citizen pay tax in various ways and the money generated from this tax is what government make use of in seeing the affairs of the country. Establishing a creative and decent tax is, however, distant from modest, especially in developing countries that want to become blended with the global economy. this system in these countries should generate the necessary dividend without government borrowing and this should be done without deterring financial activitied
Most government opinions are propelled by the element of financial condition. Citizens expect the government of their communities or countries, to provide essential assistance such as public safety, transportation, and other utilities, and for all these to be made possible, governments must subsidize infrastructure, budget funds for pension commitments, through effective financial policies and this is important. This can help the government to make the right decisions for its citizens now and in the future. They provide stability and continuity over the years as they turn over by stabilizing what actions are acceptable and unacceptable, and identifying who is responsible for taking certain actions.
However, with all the benefits of financial policies, it's some disadvantages that affect individuals or organizations, some of them are:
Negative effect on the economy
Some financial policies made by my government can sometimes have a negative consequence on the economy, causing inflation, i.e. a broad measure, such as the widespread increase in prices or the increase in the cost of living in a country, and because of this, companies generally raise the prices of their products or services as the company must adjust with regulations or uphold specific financial percentages and this affects the consumers, they forfeit purchasing power when the prices of items they buy, such as food, and utilities increase.
Inadequate resources distribution
This inadequate distribution of resources will not only weaken the economy but has many spillover environmental and civic fallouts. It immortalizes unsustainable policies in businesses, and overly, these policies can lead to underinvestment in some business areas, leading to missed opportunities
Lack of flexibility
Some financial policies can be strict, and companies may find it difficult to harmonize with the changing economic conditions. This can also prevent companies from making quick decisions in response to changing market conditions. Some policies don't move in line with some companies' missions and objectives, and this may impede innovation and creativity because they limit the capacity of the company to take risks or go after new opportunities.
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