Financial market
lastmod 2026-06-10created 2024-10-282 edits
A financial market is a collective term for markets where funds are traded.
Finance generally creates creditor-debtor relationships over money, and an instrument that embodies the creditor-debtor relationship arising from finance is called a financial asset. For example, stocks, bonds, bank deposits, and insurance policies are financial assets. The market where finance takes place, that is, the market where financial assets are bought and sold, is called a financial market, and an institution that carries out finance-related business is called a financial institution. Accordingly, the system formed by financial assets, financial markets, and financial institutions together is called a financial system.
Financial markets can be divided into two types. The first is the indirect financial market. This is a financial market in which financial institutions such as banks and insurance companies stand between the demanders and suppliers of funds, borrowing funds from suppliers and then lending them to demanders. The second is the direct financial market. Here, lending and borrowing take place directly between the suppliers and demanders of funds. Financial institutions exist in this case too, but they only act as intermediaries and collect a fee. The indirect financial market includes most financial institutions, such as banks and insurance companies, while the direct financial market includes the stock market, where stocks are traded, and the bond market, where bonds are traded.
See also
- Economics
- Financial market
- Stock market
- Stock (Share (finance))
- Bond
- Payment service provider
- Bank
- Insurance