INTRODUCTION TO

FINANCIAL MARKET
GROUP 1- BSAIS 2A
 C K
STO KET
AR
M

FINANCIAL MARKETS

FINANCIAL SYSTEM
 NATURE
AND FINANCIAL ELEMENT
IMPORTANCE
SYSTEM S
FINANCIAL SYSTEM

C I L
the key role in the economy by
A
stimulating economic growth,

A N
influencing economic

I N
M ? ?
performance of the actors,
F
affecting economic welfare

T E
financial system makes it

Y S
S
possible a more efficient
transfer of funds
overcoming the information
asymmetry problem the VALDONĖ DARŠKUVIENĖ,2010
According to Abubakir Sherkhanov (2015)
financial system is a complex, well-
integrated set of sub-systems of financial
institutions, markets, instruments, and
services which facilitates the transfer and
allocation of funds, efficiently and effectively

JIM CHAPPELOW (2019) stated that financial

system also includes sets of rules and
practices that borrowers and lenders use to
decide which projects get financed, who
finances projects, and terms of financial
VALDONĖ DARŠKUVIENĖ,2010
 ELEMENTS
According to structural approach, the financial system of an economy
consists of three main components:

1) financial markets
2) financial intermediaries
(institutions)
3) financial regulators
Each of the components plays a specific role in the
economy.According to the functional approach;

financial markets facilitate the flow of

funds in order to finance investments by
corporations, governments and
individuals.
Financial institutions are the key
players in the financial markets as they
perform the function ofintermediation and
thus determine the flow of funds.
financial regulators perform the role of
Nature of Financial Market
• The money and capital markets are at the
economic center of the industrial and
commercial world.
• Both firms and individuals rely upon the efficient
operation of these markets for obtaining capital
for investment purposes or money to meet their
short-term financial needs.
• This globalization has been facilitated by a
number of political, economic and technological
developments.
• Financial markets provide a place where
participants like investors and debtors,
regardless of their size, will receive fair and
proper treatment.
• They provide individuals, companies, and
government organizations with access to capital.

Importance of Financial
Market
• Financial markets help lower the
unemployment rate because of the
many job opportunities it offers
• Financial markets provide for the
efficient allocation of resources
within the economy.
 • Financial markets create liquidity that
allows businesses to grow and
entrepreneurs to raise money for their
ventures. 
• They reduce risk by having information
publicly available to investors and
traders. 
• These markets calm the economy by
instilling confidence in investors. 
• Investor confidence stabilizes the
Nature of Financial Market
economy.
Money Market Vs. Capital Market
Both the money market and the capital
market are the two different types of the
financial markets where in the money market
is used for the purpose of short term
borrowing and lending whereas the capital
market is used for the long term assets and
the assets which have the maturity of more
than one year
PRIMARY MARKET vs.
SECONDARY MARKET
 Primary Market
• The primary market is where securities are
created.
• It's in this market that firms sell new stocks and
bonds to the public for the first time.
 Secondary Market
• For buying equities, the secondary market is
commonly referred to as the "stock market.
• The defining characteristic of the secondary
market is that investors trade among
themselves.
PRIMARY MARKET vs. SECONDARY MARKET
PRIMARY MARKET vs. SECONDARY MARKET
PRIMARY MARKET vs. SECONDARY MARKET
PRIMARY MARKET vs. SECONDARY MARKET
PRIMARY MARKET vs. SECONDARY MARKET
Thank you!
 GROUP 1

April Joy M. Magturo (Financial system)

Roden Sales (Financial market)
Jean May Landoy (Money market & Capital Market)
Kate Harvey Nagutom (Primary and Secondary)
 REFERENCES
• https://www.quora.com/What-is-the-differ
ence-between-financial-market-and-financi
al-intermediary
• https://prezi.com/liapkavrri3u/nature-and-s
tructure-of-financial-system/
• https://www.investopedia.com/terms/f/fin
ancial-system.asp