Financial market has emerged as one of the biggest markets in the world. It is engaged in a wide range of activities that cater to a large group of people with diverse needs. financial market is the place where assets like equities, bonds, currencies, derivatives and stocks are traded. Financial markets can be found in nearly every nation in the world. Some are very small, with only a few participants, while others – like the New York Stock Exchange (NYSE) and the forex markets – trade trillions of dollars daily.
Functions of Financial Markets :
Borrowing and lending:
Financial markets provide funds to investors by lending money at an interest rate known as the cost of borrowing.
- Mobilisation of Savings and their Channelization into more Productive Uses:Financial market gives impetus to the savings of the people. This market takes the uselessly lying finance in the form of cash to places where it is really needed. Many financial instruments are made available for transferring finance from one side to the other side.
- Provides Liquidity to Financial Assets:This is a market where the buyers and the sellers of all the securities are available all the times. This is the reason that it provides liquidity to securities. It means that the investors can invest their money, whenever they desire, in securities through the medium of financial market.
- Reduces the Cost of Transactions:Various types of information are needed while buying and selling securities. Much time and money is spent in obtaining the same.