Components of the financial market

Features of the components of the financial market

Features of the components of the financial market

Components of the financial market are Briefly discussed in this section below. Components of the financial market is important part of Macroeconomics.

Each of the types of financial markets has its own characteristics. As a rule, this is expressed in the way of circulation of one or another instrument, the pricing system, the system of accounting and redistribution of instruments, etc. So, for example, a feature of the securities market is the specific nature of the product. Having no intrinsic value, securities can be sold at a high market price. Securities can be linked to medium and long term bank loans. This is a form of movement of loan capital provided by banks on loan on terms of security, repayment, urgency.

The components of the financial market have a mutual influence on each other. Financial market participants are, on the one hand, individuals, companies, government agencies that have free funds and are ready to provide them to the user, and on the other, those who need funds and are ready to pay for their use. In the financial market, future money is exchanged for real money through the inter mediation of banks. This facilitates the transition of financial funds (Fig. 1.2).

Subjects with a shortage of funds

Direct financing —-> Subjects with excess funds     —->              Firms

Mediation          —–>Financial inter mediation        —->               Firms

Fig. 1.2 – Direct financing and inter mediation

For the purpose of researching fundamental analysis, it is necessary to consider in more detail such types of financial markets as the securities market and the foreign exchange market, since these two markets provide most of the process of capital redistribution and are subject to the mutual influence of various fundamental factors.

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Important Reference links for This article

  1. Macroeconomics
  2. Investopedia

 

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