Financial market are somewhat a challenge to Monetary Control, financial innovation has profoundly changed the structure of the financial sector itself. More and more financial transactions now take place outside the deposit taking sector, meaning (among other things) that the portion of firms and assets subject to the stricter rules associated with bank regulation has shrunk too. This dynamic further complicates the task of economic management.
People have different needs, and in trying to fulfill these needs, opposite needs are matched. Where needs are matched on a large scale, markets for those needs develop. Market forces are thus:
the supply of an item or service where there is
a demand for that item or service.
Trading of that item or service is created through a price mechanism. The price is based on the value of the item or service to the traders (buyers and sellers), depending on certain market factors.
There are different markets in a system.
The financial system is complex in structure and function through the world, it was created in purpose to facilitate the flow of funds from savers to investors. It includes many different types of institutions: Financial intermediaries (banks, insurance companies and mutual funds), Financial markets (stock and bond markets). Flow of Funds Through Financial System
Financial Markets Categories
1.Primary market: is a financial market in which new issues of a security, such as a bond or a stock, are sold to initial buyers by the corporation or government agency. This market is not well known to the public because the selling of securities to initial buyers often takes place behind closed doors. An important financial institution that assists in the initial sale of securities in the primary market is the investment bank. It does this by underwriting securities: It guarantees a price for a corporation’s securities and then sells them to...