Meaning and Definition of Financial Market
A market wherein financial instruments such as
financial claims, assets and securities are traded is known as a ‘financial
In another words, financial markets may be channels
through which flow loanable funds directed from a supplier who has an excess of
assets toward a demander who experiences a deficit of funds
to Brigham, Eugene F, “The place where people and organizations wanting to
borrow money are brought together with those having surplus funds is called a
A financial market, unlike the other markets, is
more of an intangible concept and basically refers to a market place where
buyers and sellers usually participate in an exchange of assets such as
equities, bonds, derivatives and currencies.
Financial Market is a market for creation and
exchange of financial assets from household savers to business firms or
financial institutions as in the following picture.
A financial market is an institution or arrangement
that facilitates the exchange of financial instruments such as equity shares,
preference shares, debentures, deposits and loans, corporate stocks and bonds,
government bonds, and more exotic instruments such as options and futures
Financial market transactions may take place either at a specific place or location, e.g. stock exchange, or through other mechanisms such as telephone, telex, or other electronic media.