[Financial market definition] In a general sense, the market is the concept of a trading mechanism. Any trading mechanism related to goods and services can form a market. The market can be a tangible market with a specific place, or it can be intangible, especially when it refers to it generally. Therefore, we can define the financial market as a generalization of the financial transaction mechanism, that is, financing through the transaction of financial instruments. The sum total of place and action.

The financial market is an important part of the market system. It not only has the integrity of the market system, but also has its own characteristics. These characteristics establish the special status of the financial market in the market system. Comprehensive and systematic inspection of financial markets is the basis for the development and utilization of financial markets.

[The formation of financial markets]

Long before the formation of financial markets, credit instruments were created. It is the product of the development of commercial credit. However, due to the limitations of commercial credit, these credit instruments can only exist between buyers and sellers of commodities and do not have extensive liquidity. With the further development of the commodity economy, bank credit and financial markets emerged on the basis of commercial credit. The emergence and development of bank credit and financial markets have in turn promoted the development of commercial credit, making credit instruments transaction tools in the financial market and stimulating the potential importance of credit instruments. In the modern financial market, although credit instruments are still the main trading tools, there are also stocks and other financial derivatives that reflect equity or ownership relationships with extensive liquidity. They are all tools for market financial transactions and are therefore collectively referred to as financial instruments. tool.

[Form of financial market]

There are two forms of financial market: one is the physical market, that is, traders gather in places with fixed locations and trading facilities to conduct transactions. The stock exchange is a typical tangible market; the other is the intangible market, that is, the market where traders are dispersed in different locations (institutions) or use telecommunication means to conduct transactions, such as the over-the-counter market and the global foreign exchange market, which are intangible markets. market.

[Classification of financial markets]

It is divided into money market and capital market according to different maturities of trading instruments.

According to the function of the market, it is divided into distribution market (primary market) and circulation market (secondary market).

It is divided into spot market and futures market according to the delivery period.

By region, it is divided into local financial market, national financial market and international financial market.

According to different transaction objects, it is divided into bill market, securities market (stock market, bond market, fund market), derivatives market, foreign exchange market and gold market.

[Relationship between financial markets and other markets]

Under market economy conditions, various markets play a fundamental role in resource allocation. These markets are composed of the same group. A complete, unified and interconnected organic system. The market system is divided into product markets (such as consumer goods market, production means market, tourism service market, etc.) and factor markets that provide production conditions for these products (such as labor market, land market, capital market, etc.).

The financial market is an important part of the unified market system and belongs to the factor market. It is interconnected and interdependent with various markets such as consumer goods market, production means market, labor market, technology market, information market, real estate market, tourism service market, etc., and together form an organic whole of a unified market. In the entire market system, the financial market is one of the most basic components and the link with other markets. Because in a modern market economy, whether it is the purchase and sale of consumption materials, production materials, or the flow of technology and labor, various market transaction activities must be realized through the circulation of currency and the movement of funds, and are inseparable from the financial market. close cooperation. In this sense, the development of financial markets plays a decisive role in restricting the development of the entire market system, and the development of other markets in the market system provides conditions and possibilities for the development of financial markets.