The financial market, also known as the capital market, includes the money market and the capital market, and is a financing market. The so-called financial integration refers to the activities in which both supply and demand sides of funds use various financial instruments to adjust the surplus of funds during the economic operation process. It is a general term for all financial transaction activities. Various financial instruments are traded in the financial market, such as stocks, bonds, savings certificates, etc. Financing is referred to as financing, and is generally divided into two types: direct financing and indirect financing. Direct financing is an activity of direct financing between supply and demand parties, that is, fund demanders directly raise funds through the financial market to institutions and individuals with surplus funds in society; correspondingly, indirect financing refers to financing through banks. activities, that is, those in need of funds raise funds by applying for loans from financial intermediaries such as banks. Financial markets have a direct and profound impact on all aspects of economic activities, such as personal wealth, business operations, and the efficiency of economic operations, all directly depend on the activities of financial markets. \r\nThe composition of the financial market is very complex. It is a huge system composed of many different markets. However, financial markets are generally divided into two categories: money market and capital market based on the maturity of trading instruments in the financial market. The money market is a market for financing short-term funds (within one year), while the capital market is a market for long-term funds (more than one year). Money markets and capital markets can be further divided into a number of different sub-markets. The money market includes the interbank lending market, repurchase agreement market, commercial paper market, bank acceptance bill market, short-term government bond market, large denomination negotiable certificate of deposit market, etc. Capital markets include medium and long-term credit markets and securities markets. The medium- and long-term credit market is a loan market between financial institutions and industrial and commercial enterprises; the securities market is a market for financing through the issuance and trading of securities, including the bond market, stock market, fund market, insurance market, financial leasing market, etc. \r\nCompared with other markets, the financial market has its own unique characteristics:\r\nFirst, the financial market is a market where funds are the object of transaction. \r\nSecond, financial market transactions are not simply a buying and selling relationship, but more importantly a lending relationship, which embodies the principle of separation of capital ownership and use rights. \r\nThird, financial markets can be tangible markets or intangible markets. \r\nLong 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 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. \r\nConditions for formation\r\nConditions for the formation of financial markets\r\n1. The commodity economy is highly developed, and there is a huge demand and supply of funds in society. \r\n2. Have a complete and sound financial institution system. \r\n3. There are rich financial transaction tools and diversified transaction forms. \r\n4. Have sound financial legislation. \r\n5. The government can reasonably and effectively manage the financial market. \r\nThere are two forms of financial markets: one is the tangible market, that is, a market where traders gather in a place with a fixed location and trading facilities to conduct transactions. The stock exchange before the electronicization of securities trading is a typical example. Tangible market, but all stock exchanges in the world have adopted digital trading systems, so the tangible market is gradually replaced by the invisible market; the other is the invisible market, that is, traders are dispersed in different locations (institutions) or use telecommunications means to conduct transactions Transaction markets, such as over-the-counter markets, global foreign exchange markets and stock exchange markets, are all invisible markets. \r\nThe financial market system refers to the financial\r\nFinancial market\r\nThe form of the financial market. \r\nSeveral major sub-markets in the financial market system have their unique characteristics:\r\n1. Risk (uncertainty): For example, the risk of the stock market and the risk of the foreign exchange market. \r\n2. Price is based on value and is affected by supply and demand: fluctuations in stock prices and bond prices ultimately reflect their value and are affected by supply and demand. \r\n3. Fundamental analysis that affects bond circulation prices, stock prices, exchange rate fluctuations, etc. must consider both macroeconomic impacts and microeconomic impacts. \r\nRelated similar or different contents in the financial market system: \r\n1. The functions of financial markets, the functions of interbank lending markets, the functions of bond markets, the functions of stock markets, the functions of foreign exchange markets, and futures markets functions, etc. \r\n2. Foreign exchange market participants, futures market participants, and interbank lending market participants. \r\n3. Discount, rediscount, and rediscount. \r\n4. The similarities and differences between money orders, cashier's checks and checks, etc. \r\nClassification of financial market systems\r\nFinancial market systems include money markets, capital markets, foreign exchange markets and gold markets. Financial markets are generally divided into money markets and capital markets based on the term of trading instruments in the financial market. Two major categories.

\r\n1. Money market\r\nThe money market is a market for financing short-term funds, including the interbank lending market, the repurchase agreement market, the commercial paper market, the bank acceptance bill market, the short-term government bond market, and the large-denomination negotiable certificate of deposit market. . \r\n2. Capital market\r\nThe capital market is a market for financing long-term funds, including medium- and long-term bank credit markets and securities markets. The medium- and long-term credit market is a loan market between financial institutions and industrial and commercial enterprises. The securities market is a market for financing through the issuance and trading of securities, including the bond market, stock market, insurance market, financial leasing market, etc. \r\nFinancial markets can be classified as follows from different perspectives:\r\nFinancial markets\r\n(1) According to geographical scope, they can be divided into:\r\n①International financial markets, which are composed of international currency operators It is composed of financial institutions with business operations, including capital lending, foreign exchange trading, securities trading, capital transactions, etc. \r\n②The domestic financial market is composed of domestic financial institutions that handle various currency, securities and functional business activities. It is further divided into urban financial market and rural financial market, or into national, regional and local financial markets. \r\n (2) It can be divided according to the business location: \r\n① The tangible financial market refers to the financial market with fixed locations and operating facilities; \r\n② The intangible financial market refers to the market that exists in the form of an operating network. Electronic telecommunication means are used in transactions. \r\n (3) Divided according to the term of financing transactions: \r\n① Long-term capital market (capital market), which mainly supplies medium and long-term funds for more than one year, such as the issuance and circulation of stocks and long-term bonds; \r\n② The short-term capital market (money market) is a financing market for short-term capital of less than one year, such as inter-bank lending, bill discounting, short-term bonds and negotiable certificates of deposit. \r\n(4) According to the nature of transactions, it is divided into:\r\n①Issuance market, also called the primary market, is the market for new securities issuance;\r\n②Circulation market, also called the secondary market, is the market for issued, A market for buying and selling securities in circulation. \r\n(5) According to the transaction objects, it is divided into discount market, discount market, large time deposit certificate market, securities market (including stock market and bond market), foreign exchange market, gold market and insurance market. \r\n(6) According to the delivery period, it can be divided into: \r\n① Financial spot market, payment is made immediately after the financing activity is completed; \r\n② Financial futures market, payment is made on a specified date according to the contract after the investment and financing activity is completed. Delivery. Scientific and systematic division of financial markets according to the above-mentioned internal relationships is the basis for effective management of financial markets. \r\n(7) According to the transaction subject matter, it is divided into:\r\n①Money market\r\n②Capital market\r\n③Financial derivatives market\r\n④Foreign exchange market\r\n⑤Insurance market\r\n⑥ The gold and other investment products market\r\n(8) is divided according to the financing method:\r\n①Direct financing market\r\n②Indirect financing market\r\n(9) According to the specific type of trading instrument:\r \n①Bond market\r\n②Bill market\r\n③Foreign exchange market\r\n④Stock market\r\n⑤Gold market\r\n⑥Insurance market\r\nSimply speaking, it has four major functions: 1. Financing 2, adjustment 3, risk aversion 4, signal\r\n1. The financial market can quickly and effectively guide the rational flow of funds and improve the efficiency of fund allocation. \r\n(1) It expands the opportunities for contact between the supply and demand sides of funds, facilitates financial transactions, reduces financing costs, and improves the efficiency of fund use. \r\n(2) The financial market has opened up broader financing channels for fundraisers and investors. \r\n(3) The financial market provides the necessary conditions for the mutual conversion of financial instruments with different maturities and contents. \r\n2. The financial market has a pricing function, and the fluctuations and changes in financial market prices are a barometer of economic activity. \r\n(1) Financial assets all have a par amount. \r\n(2) What is the intrinsic value of corporate assets - including the value of corporate debt and the value of shareholders' equity - can only be "discovered" through the interaction between buyers and sellers in financial market transactions. That is to say, the valuation must be based on the price formed by market transactions of the financial assets related to the enterprise, rather than simply based on the book figures in the accounting statements. \r\n(3) The pricing function of the financial market also depends on the perfection of the market and the efficiency of the market. \r\n(4) The pricing function of the financial market contributes to the realization of the market resource allocation function. \r\n3. The financial market provides conditions for financial management departments to conduct indirect financial regulation. \r\n (1) The financial indirect control system must rely on developed financial markets to transmit the policy signals of the central bank, guide the behavior of various microeconomic entities through price changes in the financial market, and realize the intention of monetary policy adjustment. \r\n(2) Within a developed financial market system, there is a high degree of correlation between various sub-markets. \r\nFinancial market\r\n (3) As the reserve positions and liquidity reserve ratios of various financial assets in financial institutions increase, financial institutions will become more involved in the operation of the financial market. The indirect control of the central bank The scope and intensity will continue to be strengthened with the development of financial markets. \r\n4. The development of financial markets can promote innovation in financial instruments. \r\n(1) Financial instruments are a set of standardized contracts that combine expected returns and risks.

\r\n(2) Diversified financial instruments enable investors with different preferences for risk and return to seek investments that best meet their needs by more precisely dividing the risks inherent in various investments in the economy. \r\n(3) Diversified financial instruments can also satisfy the diverse needs of financiers as much as possible. \r\n5． Financial markets help achieve risk diversification and risk transfer. \r\n(1) The development of financial markets promotes the diversification of residents’ financial assets and the diversification of financial risks. \r\n (2) The development of the financial market opens the way for residents' investment diversification, financial asset diversification and bank risk diversification, and provides conditions for sustained and stable economic development. \r\n(3) Residents have enhanced their investment awareness and risk awareness by choosing a variety of financial assets and flexibly adjusting the storage form of surplus currency. \r\n6． Financial markets can reduce the search costs and information costs of transactions. \r\n(1) Search cost refers to the cost incurred in finding a suitable counterparty. \r\n(2) Information cost is the cost incurred in the process of evaluating the value of financial assets. \r\n(3) The function of the financial market in helping to reduce search and information costs is mainly exerted through professional financial institutions and consulting agencies. \r\nThe financial market can gather the buying and selling intentions of many investors, greatly increasing the success rate of a single investor's transaction. That is, on the premise of accepting the market price, the buyer of securities can buy the amount he wants, and the seller can He can sell the quantity he wants. This attribute of the exchange is actually liquidity. The liquidity of the exchange allows capital to be transferred between different times, regions and industries, allowing resources to be allocated. The purpose of the emergence of financial markets is to provide convenience for transactions, so liquidity is the basic economic function of financial markets. Without the function of concentrated liquidity, financial markets will lose the basis for their existence. The role of liquidity is not only here. As transaction costs, it is also reflected in the market’s decisive role in the selection and changes of trading mechanisms, because in the era of world economic integration, various financial markets are facing fierce competition, and liquidity is one of the The most direct manifestation of competitiveness. "Liquidity is a function of the size and frequency of orders. When some orders are entered into a specific trading system, other orders will be attracted to the system. It can be said that liquidity can attract liquidity." (Ruben, 1998) , so those who seize the opportunity can use liquidity to create greater liquidity, thereby having a clear strategic advantage in the competition. The characteristics of the financial market include the concentration of lending activities, the breadth of trading venues, the particularity of trading objects, the particularity of trading methods, and the consistency of market prices.