Introduction to Financial Markets

Financial Markets

INTRODUCTION TO FINANCIAL MARKETS

Business firms need large funds to undertake a desired project. Accumulation of these funds may be beyond their capacity in a reasonable period of time. Governments need funds to provide goods and services to the people. Financial market facilitates business firms as well as governments to raise the needed funds by issuing and selling different instruments. Financial market also helps investors to facilitate them to invest surplus funds and earn a return. With the help of financial market, all kinds of business, Government and the financial institutions can get financial assistance in terms of both short term finance and long term finance.

Before going into the details, let us have an understanding of the Indian financial system.The Indian financial system can be broadly classified into organized sector and unorganized sector. Organized sector consist of Regulators, Financial Institutions, Financial Markets and Financial Services. The unorganized sector consists of Money Lenders, Indigenous Bankers etc. The financial system facilitates the flow of funds from the suppliers to the users. The following diagram explains the Indian Financial System.