Financial Market and Institution

Topics: Economics, Debt, Money market Pages: 4 (1083 words) Published: January 30, 2013
Financial Market
* a kind of market where the financial management operates, no physical existence, it only involved money, consist of the legal and tax framework. Financial Institutions
* refers to banks, lending companies, credit cooperatives, pawnshops, insurance companies, government agencies (SSS, GSIS, PHILHEALTH, PAGIBIG). Why do Financial Market exists?
* In order to facilitate the interaction between providers of capital such as savers and investors and users of capital such as companies and government.  Capital Market
* Is a market for financial assets which have a long or indefinite maturity. Unlike money market the capital market instruments become mature for the period above one year. Significance, Role or functions of Capital Market

1. Mobilization of savings
* capital market is an important source for mobilizing idle savings from the economy. 2. Capital formation
* is net addition to the existing stock of capital in the economy. 3. Provisions of investment avenue
* revises sources for longer period of time.
4. Speed up Economic Growth and Development
* enhances production and productivity in the national economy. 5. Proper Regulation of Funds
* Capital markets not only helps in fund mobilization, but also helps in proper allocation of these resources. 6. Service Provision
* Provides various types of services includes long term and medium term loans to industry, underwriting services, consultancy services, export finance, etc. 7. Continuous Availability of Funds
* This is a liquid market as it makes fund available on continues basis. Money Market
* Market for short-term debt securities, such as banker’s acceptances, commercial paper, negotiable certificates of deposits, and treasury bills with a maturity of one year or less and often 30 days or less. Functions:

1. It finances temporary cash deficits of banks
2. It insures stable supply of short-term funds of savers.
3. With the stable supply...
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