Beruflich Dokumente
Kultur Dokumente
AN OVERVIEW
GOALS OF THE FIRM
Capital Structure
Decisions
Market Value of
the Firm
Dividend
Decisions
Risk
Working Capital
Decisions
FINANCE AND ECONOMICS
• Macro Economics
– Necessary for understanding the environment in
which the firm operates
•Growth rate of economy, tax environment, availability
of funds, rate of inflation, terms on which the firm can
raise finances
• Micro Economics
– Helpful in sharpening the tools of decision
making
•Principle of marginal analysis is applicable to decision making
FINANCE AND ACCOUNTING
Financial Markets
Money Market
Capital Market
Transferring Capital
• Direct Transfer of Funds
saver
Transferring Capital
• Direct Transfer of Funds
firm
saver
Transferring Capital
• Direct Transfer of Funds
Cash
firm
saver
Transferring Capital
• Direct Transfer of Funds
Cash
firm
saver
Securities
THE FINANCIAL SYSTEM
Financial Institutions
Commercial Banks
Insurance Companies
Mutual Funds
Provident Funds
Non Banking Financial
Institutions
Financial Markets
Money Market
Capital Market
Transferring Capital
• Indirect Transfer using a Financial Intermediary
Rs.
saver
Transferring Capital
• Indirect Transfer using a Financial Intermediary
saver financial
intermediary
Transferring Capital
• Indirect Transfer using a Financial Intermediary
Funds
saver financial
intermediary
Transferring Capital
• Indirect Transfer using a Financial Intermediary
Funds
saver financial
intermediary firm
Transferring Capital
• Indirect Transfer using a Financial Intermediary
Funds Funds
saver financial
intermediary firm
Transferring Capital
• Indirect Transfer using a Financial Intermediary
Funds Funds
saver financial
intermediary firm
Firm
Securities
Transferring Capital
• Indirect Transfer using a Financial Intermediary
Funds Funds
saver financial
intermediary firm
Intermediary Firm
Securities Securities
THE FINANCIAL SYSTEM
Financial Institutions
Funds Funds
Commercial Banks
Insurance Companies
Deposits/shares
Mutual Funds Loans
Provident Funds
Non Banking Financial
Institutions
Financial Markets
Money Market
Capital Market
Transferring Capital
• Indirect Transfer using Investment Banker
saver
Transferring Capital
• Indirect Transfer using Investment Banker
saver
investment
banker
Transferring Capital
• Indirect Transfer using Investment Banker
Funds
saver
investment
banker
Transferring Capital
• Indirect Transfer using Investment Banker
Funds
saver
investment
banker firm
Transferring Capital
• Indirect Transfer using Investment Banker
Funds Funds
saver
investment
banker firm
Transferring Capital
• Indirect Transfer using Investment Banker
Funds Funds
saver
investment
banker firm
Securities
Transferring Capital
• Indirect Transfer using Investment Banker
Funds Funds
saver
investment
banker firm
Securities Securities
THE FINANCIAL SYSTEM
Financial Institutions
Funds Funds
Commercial Banks
Insurance Companies
Deposits/shares
Mutual Funds Loans
Provident Funds
Non Banking Financial
Institutions
Money Market
Securities Capital Market Securities
THE FINANCIAL SYSTEM
Financial Institutions
Funds Funds
Commercial Banks
Insurance Companies
Deposits/shares
Mutual Funds Loans
Provident Funds
Non Banking Financial
Institutions
Funds Securities
• Regulated
• Rates on deposits with commercial banks are subject to
ceiling
• Rates chargeable by commercial banks and financial
institutions are subject to floors
• Rates payable on small savings are fixed by the
government
Growth Trends in the Indian
Financial System
• Impressive growth post 1950 era
• Emergence of wide array of Financial
Institutions
• Introduction of a variety of financial
schemes and instruments to mobilise
savings
• Remarkable growth in money markets
• Deregulation in recent years