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Abstract

Cause and effect relationship between the financial system and financial risk on one hand, and economic growth on the other hand is theoretically and empirically verified. Financial System of a company in each case works better if the company has greater financial strength. Without safe internal and external financial resources it is not possible to establish a company and run the production process, i.e., it is impossible to provide continuous funding of current operations. It is impossible to imagine a developed national economy without developed financial markets. Unfortunately, our country the problem of funding is very prominent, because there is a shortage of capital due to low accumulation and lack of savings. Therefore, the sources can be provided with great interest and other financing costs, and under other unfavorable conditions. Financial markets are underdeveloped and financing by issuing securities and other forms of financing behind such financing in developed countries. Therefore, the paper will analyze the financing of enterprises and the economy, the functioning of the financial system of Serbia from the point of external funding sources.

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