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Financial Market and Institution

In: Business and Management

Submitted By SuYm
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Financial Markets and Institutions.

Money Markets vs. Capital Markets
The money markets lend or borrow funds for a shorter time period, one year or less period. The main characteristics of money market are deposits, loans, acceptances and bills of exchange. There are number types of institutions that are operated in money markets, such as, central banks and commercial banks. Money markets are largely unregulated and informal because most of the payments are done by phone, fax and online.
Money markets provide individual business or government companies. Cash is the main purpose for opening money markets. The money market is important for ensuring companies and governments maintain the steady level of cash flow.
Investors use the money markets to invest funds because money markets are safe and the amount of risk is small. The reliability of short time period gives little time for a nonpayment to happen that is why, the risk is decreased.
The capital markets lend or borrow the funds for long-term period, i.e. for more than one year. The main instruments that are used in the capital market are stocks, shares, bonds, and securities of the government. Some important institutions of the capital market are stock exchanges, commercial banks and nonbank institutions, such as insurance companies, loan banks, and construction groups. In capital markets, the institutions not largely regulated.
Capital markets provide fixed cash for their institutions to buy land, estate and machinery, etc. They put their finance to work, first to long-term, secure and useful employment.
Capital markets are risky markets and they are not used to invest short-term capitals. Many investors contact the capital markets to save for retirement or education. Capital markets are suitable for young and risk taking investors.
The main differences between money markets and capital markets are…...

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