UPSC Exam > UPSC Notes > Indian Economy (Prelims) by Shahid Ali > Financial Market - Economics, UPSC, IAS.
Financial Market - Economics, UPSC, IAS. | Indian Economy (Prelims) by Shahid Ali PDF Download
Financial Market
Financial Market
A market where funds are transacted
Basis: interest or dividend
It has two parts:
- Money Market
- Capital Market
Money Market
It is a short term financial market where the duration of transaction is 1- 364 days. It can be sub-divided into:
- Organized
- Unorganized
Organized Money Market
It is in existence since independence but its real development took place after 1986.
Following are the instruments used in it:
- Treasury Bills
- Call Money Market
- Certificate of Deposit
- Commercial Bills
- Commercial Papers
- Cash Management Bill
- Mutual Funds
- Repo & Reverse Repo Market
Treasury Bills
Organized in 1986
Used by central government for short term liquidity requirement
They are of 5 types:
- 14 days (intermediate)
- 14 days (auctionable)
- 91 days
- 182 days
- 364 days
Call Monet Market
It is an inter-bank money market where funds are borrowed and lent for one day.
No collateral required
Funds are raised upto 3 days
Interest rate depends on demand and supply on a particular day.
Certificate of Deposits
Organized in 1989
Used by the Banks and issued to the depositors for a specified period (less than one year)
Commercial Papers
Organized in 1990
Used by corporate houses of India
Issuing company need to obtain a specified credit rating (from CRISIL etc.)
Commercial Bills
Organized in 1990
Issued by All India Financial institutions, Non-Banking financial companies, scheduled commercial banks& Mutual funds etc
Cash Management Bill
Started in August 2009 to meet the temporary cash flow mismatch of the government
Unoragnised Money Market
It is comparatively older market than that of Money Market.
Its components are:
Hundis
Marwari
Indigenous Bankers
Moneylenders / small and big businessmen
* Money Market is regulated by the RBI except the Mutual Funds which have dual regulators RBI & SEBI.
Capital Market
It facilitates long term requirement of funds in economy.
Structure & components:
- Financial institutions
- Banking industry
- Security Market
Financial regulators:
I. RBI
II. SEBI
III. NABARD
IV. IRDA
V. SIDBI
The document Financial Market - Economics, UPSC, IAS. | Indian Economy (Prelims) by Shahid Ali is a part of the UPSC Course Indian Economy (Prelims) by Shahid Ali.
All you need of UPSC at this link: UPSC
|
36 videos|62 docs|78 tests
|
FAQs on Financial Market - Economics, UPSC, IAS. - Indian Economy (Prelims) by Shahid Ali
| 1. What is the significance of financial markets in the field of economics? |  |
Financial markets play a crucial role in the field of economics as they facilitate the efficient allocation of resources and enable the flow of funds between borrowers and lenders. These markets provide a platform for individuals, institutions, and governments to buy and sell financial instruments such as stocks, bonds, currencies, and derivatives. By allowing participants to trade these instruments, financial markets help determine prices, raise capital for businesses, and provide opportunities for investors to earn returns on their investments.
| 2. How does the functioning of financial markets impact the overall economy? | |
The functioning of financial markets has a significant impact on the overall economy. When financial markets are efficient and well-functioning, they promote economic growth, allocate resources efficiently, and facilitate economic stability. For example, efficient stock markets provide companies with access to capital, allowing them to invest in new projects and expand their operations. Additionally, the availability of various financial instruments in the market helps to manage risk, provide liquidity, and encourage investment and savings.
| 3. What are the different types of financial markets? | |
Financial markets can be categorized into several types based on the type of financial instruments traded and the maturity of the instruments. Some common types of financial markets include:
1. Capital markets: These markets facilitate the buying and selling of long-term financial instruments such as stocks and bonds. They are crucial for raising capital for businesses and financing government projects.
2. Money markets: Money markets deal with short-term debt instruments with high liquidity, such as Treasury bills, commercial papers, and certificates of deposit. They provide a platform for short-term borrowing and lending between financial institutions and corporations.
3. Foreign exchange markets: Foreign exchange markets enable the exchange of different currencies. They play a vital role in facilitating international trade and investment by allowing individuals and businesses to convert one currency into another.
4. Derivatives markets: Derivatives markets involve the trading of financial contracts whose value is derived from an underlying asset. Examples include options, futures, and swaps. These markets help manage risks and provide opportunities for speculation.
| 4. How does government regulation influence financial markets? | |
Government regulation plays a crucial role in ensuring the stability, transparency, and fairness of financial markets. Regulations are put in place to protect investors, prevent fraud, maintain market integrity, and promote fair competition. Some common ways in which government regulation influences financial markets include:
1. Setting capital requirements: Regulators may impose minimum capital requirements on financial institutions to ensure their solvency and stability. This helps protect depositors and investors from potential losses.
2. Enforcing disclosure rules: Regulations require companies to provide accurate and timely information to investors. This enhances transparency and allows investors to make informed decisions.
3. Monitoring market activities: Regulators oversee market activities to detect and prevent manipulation, insider trading, and other fraudulent practices. They may impose penalties and sanctions on individuals or institutions found to be in violation of the rules.
4. Implementing monetary policy: Central banks, through their regulatory powers, influence interest rates, money supply, and credit availability. These measures can impact the overall functioning of financial markets and the economy.
| 5. How do financial markets contribute to economic inequality? | |
Financial markets can contribute to economic inequality in several ways. Firstly, individuals with greater financial resources and knowledge are often better positioned to participate in these markets and benefit from investment opportunities, thereby widening the wealth gap between the rich and the poor. Additionally, income generated from investments in financial markets, such as dividends or capital gains, tends to disproportionately benefit those who already hold significant wealth.
Furthermore, financial markets can amplify economic instability. During periods of financial crisis or market downturns, the impact is often felt more severely by individuals with limited financial resources, while those with greater wealth may be better able to weather the storm. This can further exacerbate existing inequalities in society.
It is important for policymakers to address these concerns and ensure that financial markets are inclusive and accessible to all, while also promoting regulations that mitigate the risks of inequality and instability.
Related Exams
About this Document
|
1.4K Views |
|
4.98/5 Rating |
|
Dec 22, 2024 Last updated |
Document Description: Financial Market - Economics, UPSC, IAS. for UPSC 2024 is part of Indian Economy (Prelims) by Shahid Ali preparation.
The notes and questions for Financial Market - Economics, UPSC, IAS. have been prepared according to the UPSC exam syllabus. Information about Financial Market - Economics, UPSC, IAS. covers topics
like Financial Market and Financial Market - Economics, UPSC, IAS. Example, for UPSC 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Financial Market - Economics, UPSC, IAS..
Introduction of Financial Market - Economics, UPSC, IAS. in English is available as part of our Indian Economy (Prelims) by Shahid Ali
for UPSC & Financial Market - Economics, UPSC, IAS. in Hindi for Indian Economy (Prelims) by Shahid Ali course.
Download more important topics related with notes, lectures and mock test series for UPSC
Exam by signing up for free. UPSC: Financial Market - Economics, UPSC, IAS. | Indian Economy (Prelims) by Shahid Ali
Description
Full syllabus notes, lecture & questions for Financial Market - Economics, UPSC, IAS. | Indian Economy (Prelims) by Shahid Ali - UPSC | Plus excerises question with solution to help you revise complete syllabus for Indian Economy (Prelims) by Shahid Ali | Best notes, free PDF download
Information about Financial Market - Economics, UPSC, IAS.
In this doc you can find the meaning of Financial Market - Economics, UPSC, IAS. defined & explained in the simplest way possible. Besides explaining types of
Financial Market - Economics, UPSC, IAS. theory, EduRev gives you an ample number of questions to practice Financial Market - Economics, UPSC, IAS. tests, examples and also practice UPSC
tests
|
36 videos|62 docs|78 tests
|
Download as PDF
|
Explore Courses for UPSC exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
Related Searches
Important questions
,IAS. | Indian Economy (Prelims) by Shahid Ali
,Extra Questions
,UPSC
,practice quizzes
,Free
,UPSC
,Semester Notes
,Viva Questions
,video lectures
,shortcuts and tricks
,past year papers
,Financial Market - Economics
,mock tests for examination
,Financial Market - Economics
,Financial Market - Economics
,Objective type Questions
,MCQs
,ppt
,UPSC
,Summary
,IAS. | Indian Economy (Prelims) by Shahid Ali
,IAS. | Indian Economy (Prelims) by Shahid Ali
,Previous Year Questions with Solutions
,study material
,Exam
,Sample Paper
;
Additional Information about Financial Market - Economics, UPSC, IAS. for UPSC Preparation
Financial Market - Economics, UPSC, IAS. Free PDF Download
The Financial Market - Economics, UPSC, IAS. is an invaluable resource that delves deep into the core of the UPSC exam.
These study notes are curated by experts and cover all the essential topics and concepts, making your preparation more efficient and effective.
With the help of these notes, you can grasp complex subjects quickly, revise important points easily,
and reinforce your understanding of key concepts. The study notes are presented in a concise and easy-to-understand manner,
allowing you to optimize your learning process. Whether you're looking for best-recommended books, sample papers, study material,
or toppers' notes, this PDF has got you covered. Download the Financial Market - Economics, UPSC, IAS. now and kickstart your journey towards success in the UPSC exam.
Importance of Financial Market - Economics, UPSC, IAS.
The importance of Financial Market - Economics, UPSC, IAS. cannot be overstated, especially for UPSC aspirants.
This document holds the key to success in the UPSC exam.
It offers a detailed understanding of the concept, providing invaluable insights into the topic.
By knowing the concepts well in advance, students can plan their preparation effectively.
Utilize this indispensable guide for a well-rounded preparation and achieve your desired results.
Financial Market - Economics, UPSC, IAS. Notes
Financial Market - Economics, UPSC, IAS. Notes offer in-depth insights into the specific topic to help you master it with ease.
This comprehensive document covers all aspects related to Financial Market - Economics, UPSC, IAS..
It includes detailed information about the exam syllabus, recommended books, and study materials for a well-rounded preparation.
Practice papers and question papers enable you to assess your progress effectively.
Additionally, the paper analysis provides valuable tips for tackling the exam strategically.
Access to Toppers' notes gives you an edge in understanding complex concepts.
Whether you're a beginner or aiming for advanced proficiency, Financial Market - Economics, UPSC, IAS. Notes on EduRev are your ultimate resource for success.
Financial Market - Economics, UPSC, IAS. UPSC Questions
The "Financial Market - Economics, UPSC, IAS. UPSC Questions" guide is a valuable resource for all aspiring students preparing for the
UPSC exam. It focuses on providing a wide range of practice questions to help students gauge
their understanding of the exam topics. These questions cover the entire syllabus, ensuring comprehensive preparation.
The guide includes previous years' question papers for students to familiarize themselves with the exam's format and difficulty level.
Additionally, it offers subject-specific question banks, allowing students to focus on weak areas and improve their performance.
Study Financial Market - Economics, UPSC, IAS. on the App
Students of UPSC can study Financial Market - Economics, UPSC, IAS. alongwith tests & analysis from the EduRev app,
which will help them while preparing for their exam. Apart from the Financial Market - Economics, UPSC, IAS.,
students can also utilize the EduRev App for other study materials such as previous year question papers, syllabus, important questions, etc.
The EduRev App will make your learning easier as you can access it from anywhere you want.
The content of Financial Market - Economics, UPSC, IAS. is prepared as per the latest UPSC syllabus.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup