Thursday, September 20, 2018



Generally, the organizational structure of the financial system consists of several components, Financial markets, products, market participants:

  • Components of the financial system

  1.  financial market
  2.  product 
  3.  market participants

               Effective transfer of resources from those with unused resources to others in urgent need realized on the financial markets. In formal terms, financial markets offer channels for the allocation of savings for investment. These offer a variety of assets for savers as well as various forms in which investors can Raise funds and dissociate savings and investment. Investors and investors are limited not by their individual abilities, but by the ability of the economy to invest or save. Financial markets, They thus contribute to economic development, insofar as they are interested in economies and Investment.

  • Financial markets have two main components; the money market and the capital market.

  • MONEY MARKET:- The money market refers to the market where borrowers and lenders exchange short-term funds to solve their problems. Liquidity needs. Money market instruments are generally financial receivables with low default risk, maturities less than a year and high marketing.
  • Capital Market:- The capital market is a market for financial investments that represent direct or indirect capital claims. It is a wider Securities market and includes all forms of loans and loans that the Creation of a negotiable financial instrument. The capital market includes the complex of institutions and Mechanisms to pool and make available resources for medium- and long-term funds Businesses, governments and individuals. The capital market also includes the process of securities have already been transferred. The capital market, and in particular the stock market, is called the barometer of the economy. Government policy is designed to facilitate the creation of wealth through products and services.
            - Needed for the capital market:-

      -The capital market plays an extremely important role in promoting and sustaining economic growth.
      - This is an important and effective channel for managing and mobilizing funds for companies, both private and government.
      - It provides an efficient source of investment in the economy.
      - It plays an important role in mobilizing savings for investments in productive assets in order to expand
long-term growth prospects in the country and thus serve as the main catalyst in the transformation of the economy in a more efficient, innovative and competitive market on the world stage.
      -In addition to resource allocation, capital markets also provide an environment for risk management, which enables diversification of risks in the economy.
     - A well-functioning capital market tends to improve the quality of the information, as it plays an important role in encouraging the adoption of stronger corporate governance principles, thereby supporting the trading environment based on integrity.
     -The capital market played a decisive role in supporting the periods of technical development and economic development through history.
     - Among other things, liquid markets provide funding for capital-intensive projects with long pregnancy periods. This was, of course, confirmed during the industrial revolution of the 18th century and continues to apply, even when we move to the so-called "new economy".
     - The capital markets allow companies to provide their employee shares via ESOP.
     - Capital markets provide currency for purchase through the exchange of shares. "Capital markets are an excellent way of settling.
     - Investment capital and private equity funds investing in private companies get an exit option when
   The company enters the capital markets.
     -The existence of a deep and wide capital market is imperative to stimulate growth in our country.
An important prerequisite for India was the development of the capital market to provide alternative sources
financing for companies and at the same time to achieve more efficient mobilization of investors' savings. The capital market also provides a valuable source of external funding.

                       – To mobilize resources for investments.
                              – To facilitate the buying and selling of securities. 
                                        – To facilitate the process of efficient price discovery

-: Securities Market:-

As usual, the securities market refers to the markets for these financial instruments/ receivables/liabilities
and is easily transferred for sale. The securities market has two interdependent and inseparable segments,
new problems (primary) market and stock (secondary) market.

  • Primary Market:-
The first mall will offer you a network of new currency offers, while the second trader will sell your wages the first published. Merchants sell for sale on the first market to raise funds for investment and the introduction of an obligation. In other words, on the market, the business promotes the company by issuing new values called the first mall. These resources are needed for new projects and projects available at one time See extension, design, variation, and design. The first market (new issue) is very important for the country's economy. By first The market as a productive tool produces a product from the investor. The latter invests for Create a new product and provide customer service in India and abroad. The power of the economy The country is based on the stock market. The first market is to make and supply Property on the secondary market.
  • Secondary Market:-
             The second market allows security guards to correct their assets in response to their changes Risk assessment and return.
           It also sells money for money to pay for financing needs. The award, which identifies all company and business information, including productivity risk Second Market, helping the first money supply market. The second mall is the exchange that offers a platform for buying and selling. Investor money. The trading chain of trading is not just for traders and merchantsSecurities are limited to trading only. 
          The second stock market or market ensures that the expenses, negotiations, and value of the goods are free of charge. For the thoseThe reason for the money market is called a public mall on the stock market, which shows economic trends as well as the hopes, wishes, and concerns of investors.
          This second store has two more elements: First, the market is well-priced Receiving and immediate payment free of charge, the other is the future of markets that require spending for the future transfer and payment. Another solution is the options market that requires a bond insurance future issue. 
          In general, two options are a market choice. The set option provides The owner sells the order of the prepayment author before one time, a The dialing option allows consumers to buy security from the author of the choice at a specific cost.

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