Beruflich Dokumente
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Chapter Objectives
To understand:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Meaning of Financial system. Components of the Financial system. Functions of the Financial System. Key elements of the Financial System. Key elements of a well functioning financial system. Bank- based and Market- based financial systems. Nature and role of Financial Institutions and Markets. Link between Money market and Capital market. Link between Primary market and Secondary market Functions and Characteristics of Financial markets.
credit.
Financial Markets
Types: Money Market A market for short -term
debt instruments Capital Market - A market for long -term equity and debt instruments .
A buoyant secondary market indispensable for the presence of a vibrant primary market Secondary market provides a basis for the determination of prices of new issues Depth of the secondary market depends on the primary market
Financial Instruments
Types : Primary
Secondary
Financial Services
Major categories : Funds Intermediation
Payments Mechanism Provision of liquidity Risk Management Financial Engineering
A strong legal and regulatory environment Stable money Sound public finances and public debt management A central bank Sound banking system Information system Well -functioning securities market
Drawbacks:
Prone to instability Exposure to market risk Free rider problem
Drawbacks:
Impedes competition