Each country has its own specific financial institution, which may differ in many ways: a sort of activity, size, complex services.At the same time, all agencies of this type have a number of common functions, which does not depend on the distance and local conditions: they can develop the economy and establish international contacts.
loan market or financial market - a kind of mechanism that allows the redistribution of capital between borrowers and lenders with the help of intermediaries.The financial market has the organizational form - a set of credit institutions that redirect funds from borrowers owners and vice versa.
Financial Markets: the nature and function
loan capital - is the basis upon which the financial market as a major "commodity" in the financial market are the money they sell, buy and take in the form of loans.The financial market is made up of money market (which, in turn, includes the interbank market, Accounts market and the currency market) and capital market (it consists of the securities market and the market of medium-term and long-term loans).The money market is represented by short-term credit operations (about one year).Capital Market "engaged" in stocks, bonds, medium- and long-term loans.Credit market supplies for the government, banks and corporations long-term investment resources.
interbank market - is an integral part of the loan market;in this market are placed temporarily free money between banks in the form of interbank deposits for short periods.On the accounting treatment of the main tools of the market is very mobile and liquid - it notes and short-term obligations.Currencies markets deal with the international payment traffic and financial obligations of persons (legal and physical) of different countries.
The main function of the financial market: the transfer temporarily idle cash into loan capital.Financial markets, like all markets, performs a number of other functions:
- mobilization and accumulation of temporarily available funds.Financial market offers different ways of investing money to generate income from temporarily surplus funds can invest in securities or to open a deposit account in the bank.In the future, to mobilize enough funds to sell securities or to take out a bank loan.
- distribution of free funds.Financial market provides movement of capital between different industries.The market provides investment capital needed on the timing and structure.Free money together in a large amount, sufficient for investment, and are then converted into loan capital.
- redistributive function.Once all the money mobilized and distributed for the financial market the main task becomes the task of ensuring the movement and distribution of funds.
- improving the efficiency of the economy.The economy can function only if the constant movement of funds between firms, individuals, banks, enterprises and government.The main mechanism for this constant transfusion of capital, is the financial market.
addition to the redistribution of funds in the financial market necessarily occur and redistribution of risks.For example, if you give your friend in debt, and he will not return it, the risk of default is your entirely, and you do not get any money not only, but also of his own money.But if you put the money in a deposit account in the bank, and your friend will take in the bank loan, the risk of non-distributed even on the bank.And you get an additional interest income from the placement of temporary free funds.
