Question

What is financial market? And what is its role?

Answer 1

Meaning: -
A financial Market is an institution that facilitates exchange of financial instruments including deposits, loans, corporate stocks, government bonds, etc. financial Market consists of both capital and money market.

Definition: -
According to Brigham Eugene F " The place where people and organization wanting to borrow money, are brought together, with those having funds is called a financial market":

Role of Financial Market:

A financial market is of great use for a country as it helps its economy in the following ways.

1. Saving Mobilization: -
   Obtaining funds from surplus such as households, individuals, public sector units, central government, etc and channelizing these funds for productive purposes.
2. Investments: -
   The financial market plays an important role in arranging to invest funds thus collected in those units which are in need of funds.

3. National growth: -
   The financial market contributes to national growth by ensuring continuous flow of surplus funds to deficit units.

4. Entrepreneurship growth: -
   Financial market contributes to the development of the entrepreneurial class by making available the necessary financial resources.

5. Industrial development: -
   The components of financial markets help towards accelerated growth of industrial and economic development of a country, thus contributing to raising the standard of living and the society's well being.