Financial market refers to the general name of places that operate monetary fund lending, foreign exchange trading, securities trading, bond and stock issuance, and gold and other precious metals trading. The combination of direct financial market and indirect financial market constitutes the whole financial market. Financial markets can be classified from different angles: (1) According to the financing period, they can be divided into short-term financial markets and long-term financial markets. Short-term financial market, also known as money market, includes bill discount market, short-term deposit and loan market, short-term bond market and interbank lending market. Long-term financial market is also called capital market, including long-term loan market and securities market. (2) According to the transaction object, it can be divided into local currency market (including money market and capital market), foreign exchange market, gold market and securities market.
Money market refers to the market where financial assets with a maturity of less than one year are traded. The main function of the market is to maintain the liquidity of financial assets in order to convert them into currencies that can be circulated at any time. Its existence, on the one hand, meets the borrower's short-term capital demand, on the other hand, it finds a way out for temporarily idle funds. Money market generally refers to the trading market of short-term credit instruments such as treasury bills, commercial bills, bank acceptance bills, negotiable certificates of deposit and repurchase agreements. ?
With the characteristics of short term, strong liquidity and low risk, it is called "quasi-currency" after cash currency and deposit currency in the level of money supply, so it is called "money market".
Compared with the money market, the capital market has the following characteristics:
1. Long financing cycle
At least 1 year, or as long as several decades, or even no expiration date. For example, the term of medium and long-term bonds is greater than 1 year; Stocks have no expiration date and are permanent securities; The duration of closed-end funds is generally 15-30 years.
2. The liquidity is relatively poor
Most of the funds raised in the capital market are used to solve the medium and long-term financing needs, so the liquidity and liquidity are relatively weak.
3. High risks and high returns
Because of the long financing period, the possibility of major changes is also great, the market price is easy to fluctuate, and investors have to bear greater risks. At the same time, as a return to risk, its income is also very high.
In the capital market, the fund providers are mainly savings banks, insurance companies, trust and investment companies and various funds and individual investors; The demanders of funds are mainly enterprises, social organizations and government agencies. Its trading objects are mainly medium and long-term credit instruments, such as stocks and bonds. Capital market mainly includes medium and long-term credit market and securities market.
4. The amount of capital borrowing is very large.
The price has changed greatly.
Compared with other markets, financial markets have their own unique characteristics (differences):
First, the financial market is a market with funds as the transaction object.
Second, financial market transactions are not simple buying and selling relationships, but more importantly, lending relationships, which embody the principle of separation of ownership and use rights of funds.
Third, the financial market can be either a tangible market or an intangible market.
Characteristics (differences) of money market:
1. Low risk and low return
2. Short-term and high liquidity.
3. The transaction volume is large
A complete financial market should include four basic elements (connections):
1. Fund suppliers and fund demanders. Including the government, financial institutions, enterprises and institutions, residents, foreign businessmen and so on. , both to provide funds to the financial market, but also to raise funds from the financial market. This is a basic factor in the formation and development of financial markets.
2. Credit instruments. This is the object of borrowing capital transactions in the financial market. Such as various bonds, stocks, bills, negotiable certificates of deposit, loan contracts, mortgage contracts, etc. , is the object that financial market investment and financing activities must rely on.
3. Credit intermediary. Here refers to banks, investment companies, stock exchanges, brokers, brokers and other institutions, as the intermediary between the supply and demand of funds, they play the role of contact, media and trading on behalf of customers.
4. Price, the price of the financial market refers to the value it represents, that is, the sum of the specified monetary funds and the interest rates or yields they represent.
Financial markets include capital markets, and short-term financial markets can also be called money markets.
Expand:
From different angles, financial markets can be classified as follows:
1. According to the geographical scope, it can be divided into:
(1) The international financial market consists of financial institutions engaged in international monetary business, whose business contents include capital lending, foreign exchange trading, securities trading and capital trading.
(2) The domestic financial market, composed of domestic financial institutions, is engaged in various monetary, securities and functional commercial activities. It is divided into urban financial markets and rural financial markets, or into national, regional and local financial markets.
2. According to the business premises, it can be divided into:
(1) Tangible financial markets refer to financial markets with fixed sites and operating facilities;
(2) The intangible financial market, which exists in the form of operating network, conducts transactions by means of electronic telecommunications.
3. According to the term of financing transaction, it is divided into:
(1) Long-term 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;
(2) Short-term capital market (money market) refers to the financing market of short-term funds within one year, such as interbank lending, bill discount, short-term bonds, negotiable certificates of deposit, etc.
4 according to the nature of the transaction is divided into:
The issuance market, also known as the primary market, is the market where new securities are issued;
The circulation market, also known as the secondary market, is the trading market of securities that have been issued and are in circulation.
5. According to the transaction object, it is divided into loan market, discount market, large deposit certificate market, securities market (including stock market and bond market), foreign exchange market, gold market and insurance market.
6. According to the delivery cycle, it can be divided into:
(1) financial spot market, where payment and delivery will be made immediately after financing activities are completed;
(2) In the financial futures market, after the investment and financing activities are completed, payment and delivery shall be made on the specified date agreed in the contract. Scientific and systematic division of financial markets according to the above internal relations is the basis for effective management of financial markets.
7. According to the transaction object, it is divided into:
① Money market
② Capital market
③ Financial derivatives market
④ Foreign exchange market
⑤ Insurance market
⑥ Market of gold and other investment products
8. According to financing methods, it can be divided into:
① Direct financing market
② Indirect financing market
9. According to the specific types of trading instruments:
① Bond market
② Bill market
③ Foreign exchange market
④ Stock market
⑤ Gold market
⑥ Insurance market
References:
Financial market; Money market; capital market