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Financial Institutions and Market

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Financial Institutions and Market
FINANCIAL INSTITUTIONS AND MARKETS
Unit I: Nature and Role of Financial system – Introduction; structure of financial system; Equilibrium in financial markets; financial system and economic development; Theories of Impact of Financial developments

Unit I - Introduction to Financial Institutions and Markets
Financial System- implies a set of Complex and closely connected institutions, markets, transactions, agents, practices, claims and liabilities in a economy What is the financial system concerned with?  Money  Credit  Services  finance Functions of Financial system  Financial Institutions- act as mobilisers and depositories of saving and as the custodian of finance.  Provides various financial services to the society. Financial institution  A financial institution is an institution whose primary source of profits is through financial asset transactions Classifications of Financial Institutions        Banks Stock Brokerage Firms Non Banking Financial Institutions Building Societies Asset Management Firms Credit Unions Insurance Companies

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Functions of Financial Institutions  The principal function of financial institutions is to collect funds from the investors and direct the funds to various financial services providers in search for those funds. Financial Markets  A financial market is a market in which financial assets are traded. In addition to enabling exchange of previously issued financial assets Six basic functions of financial markets  Borrowing and Lending  Price Determination  Information Aggregation and Coordination  Risk Sharing  Liquidity  Efficiency Financial Instruments  Financial instruments are cash, evidence of an ownership interest in an

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