In Finance, What Are Tangible Benefits?

The financial market refers to the general term for operating money and capital borrowings, foreign exchange trading, securities trading, bond and stock issuance, and gold and other precious metal trading venues. The combination of direct financial markets and indirect financial markets together constitute the financial market as a whole. Financial markets can be classified from different perspectives: (1) According to financing terms, they can be divided into short-term financial markets and long-term financial markets. The short-term financial market is also called the currency market, including the bill discount market, the short-term deposit and loan market, the short-term bond market, and the inter-bank lending market among financial institutions. The long-term financial market is also known as the capital market, including the long-term loan market and the securities market. (2) According to the transaction objects, it can be divided into local currency markets (including currency markets and capital markets), foreign exchange markets, gold markets, and securities markets. ^[1]

Basic Information

Chinese name

Financial market

Foreign name

financial market

Function

Financing, regulation, hedging

category

economic

nickname

Capital market

Financial markets are also known as capital markets, including money markets and capital markets.

There are two types of financial markets: one is the tangible market, that is, the market where traders concentrate their transactions in places with fixed locations and trading facilities.

The financial market can be classified as follows from different perspectives:

Simply put, it has four functions: 1. Financing 2. Adjustment 3. Hedging 4. Signal

1. The financial market can quickly and effectively guide the rational flow of funds and improve the efficiency of fund allocation.

(1) Expansion of opportunities for the supply and demand of funds

The financial market can gather the willingness of many investors to buy and sell, which greatly increases the success rate of a single investor's transaction. That is, under the premise of accepting the market price, the buyer of the securities can buy the quantity he wants, and the seller can sell him. The quantity you want to sell. This attribute of the exchange is actually liquidity. The liquidity of the exchange enables capital to be transferred between different times, regions and industries, and resources are allocated. The purpose of the emergence of financial markets is to provide convenient transactions. Therefore, liquidity is the basic economic function of financial markets. Without the function of centralized liquidity, financial markets lose their foundation. The role of liquidity is not only here, as

It is reported that the People's Bank of China recently released "The Operation of Financial Market in March 2013". The situation shows that from January to March 2013, the financial market generally operated smoothly. In March, the issuance of bonds in the interbank market increased year-on-year, and the proportion of bonds issued under five years increased. The interbank market's inter-bank borrowing and repurchase volume increased compared with the previous month, and the money market interest rate fell. Current bond transactions are active. The inter-bank bond index and the exchange Treasury bond index rose slightly. In March, the Shanghai Stock Exchange Index oscillated and declined, and the trading volume decreased. ^[2]

Financial market media refers to those organizations, institutions or individuals who act as trading media in the financial market, engage in transactions or facilitate the completion of transactions, that is, financial market intermediaries.

A complete financial market should include four basic elements:

(1) Funders and funders. Including the government, financial institutions, enterprises and institutions, residents, foreign businessmen, etc., can provide funds to the financial market, and can also raise funds from the financial market. This is a fundamental factor in the formation and development of financial markets.

(2) Credit facilities. this is

Components of a financial market

(I) Participants in the financial market

It refers to a unit that participates in the trading activities of the financial market and forms a buyer and a seller of securities.

1. Government departments: raise funds through issuing bonds.

2. Industrial and commercial enterprises: They are either fundraisers or fund suppliers.

3. Financial institutions: are the most important participants in the financial market. There are mainly deposit financial institutions, non-deposit financial institutions, and central banks.

4. Individual: is the supplier of funds in the market.

(2) Financial instruments

It is a written document produced during credit activities that can prove the amount, term and price of financial transactions.

Characteristics of financial instruments:

1. Repayment: refers to the time before the debtor must return the principal.

2. Liquidity: refers to the ability of financial instruments to quickly become currencies without suffering losses.

3. Risk (safety): refers to the degree of risk of the principal and expected return of the purchase of financial instruments or the degree of security protection.

4. Yield (profitability): Refers to the ratio of the return on the financial instrument to the principal.

(3) Organizational forms of financial markets

Refers to the method used for financial transactions.

1. An organized and centralized transaction in a fixed location.

"Bilateral Auction"

Buyer's highest bid = Seller's lowest asking price

2. Decentralized transactions are conducted through the counters of financial institutions.

"Bargaining" transactions, also known as storefront transactions.

3. Over-the-counter trading methods

Complete transactions with advanced communications.

(IV) Management of financial markets

Refers to the management conducted by the central bank and relevant regulatory authorities to maintain the normal order of the financial market.

(I) Management principles

Full disclosure

Stop the treacherous principle

(2) Management content

1. Management of the securities market

(1) Restricting speculative activities

Increase margin ratios in credit transactions;

Before the transaction, the buyer deposits money in advance, and the seller deposits securities in advance;

Limit the number of transactions;

When necessary, stop accompanying the city commission;

Limit or stop credit transactions.

(2) Prohibition of bad trading behavior

Spread false information

Market manipulation

Joint manipulation

Laundering: refers to the behavior of a securities seller to immediately repurchase the securities it sells.

Insider trading

Cheating by securities companies

2. Management of bill market

Management of the issuance, acceptance, discounting and use of bills

3. Management of interbank lending market

Management of market access, use of borrowing funds, term, etc.

in

The position of financial markets in a market economy:

1. Market economy

The operating mechanism of the financial market

The movement of funds in the financial market has a certain regularity. Due to the need to adjust the surplus of funds, funds always flow from surplus regions and sectors to shortage regions and sectors. Financial market

Compared with other markets, the special characteristics of financial markets are mainly reflected in:

1. The relationship between market participants is a loan relationship and a principal-agent relationship, which is the temporary separation or conditional transfer of the right to use and ownership of funds based on credit.

2. Financial market transactions are not ordinary commodities, but special commodities-monetary funds and their derivatives.

3. Transaction methods in financial markets are special.

4. The determination of prices in financial markets is complicated, with many influencing factors and huge fluctuations.

5. The place for market transactions is intangible in most cases. ^[5]