Financial Market
Financial markets refer broadly to any marketplace where the trading of securities occurs, including the stock market, bond market, forex market, and derivatives market, among others. Financial markets are vital to the smooth operation of capitalist economies.
The stock market is just one type of financial market. Financial markets are made by buying and selling numerous types of financial instruments including equities, bonds, currencies, and derivatives. Financial markets rely heavily on informational transparency to ensure that the markets set prices that are efficient and appropriate. The market prices of securities may not be indicative of their intrinsic value because of macroeconomic forces like taxes. The goal of the formation and functioning of the financial market is the accumulation and mobilization of temporarily free funds and their effective placement in various branches and spheres of the economy, the state of which is primarily determined by the efficiency of the transfer of investment funds. Funds flow from owners of savings to borrowers through various channels, which can be divided into two types. The first type includes channels of direct financing, without the participation of intermediaries, and the second type of channels – intermediary channels, when the movement of financial flows is carried out through financial institutions: banks, investment, pension funds, insurance companies, etc. In these cases, another entity of the financial market appears, and its institutional infrastructure is formed [Арутюнян, pp.12-13]. The financial markets cover the money, capital, and foreign exchange (FX) markets [National Bank of Ukraine]. Financial markets can allow you to invest money in shares (also known as equities) to build up money for the future, take out insurance, and enable lenders such as banks to borrow [Bank of England].
⠀ Financial Markets [Електронний ресурс] / Will Kenton // Investopedia. – 2020. – Режим доступу до ресурсу: https://www.investopedia.com/terms/f/financial-market.asp.
Арутюнян, С. С. (Ред.). (2018). Фінансовий ринок: навчальний посібник. Одеса: Міністерство освіти й науки України, Одеський національний економічний університет.
Financial markets. National Bank of Ukraine. Retrieved from: https://bank.gov.ua/en/markets
What are financial markets, and why are they important? Bank of England. Retrieved from: https://www.bankofengland.co.uk/knowledgebank/what-are-financial-markets-and-why-are-they-important